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Emerging Stocks Cap Biggest Weekly Decline Since August

Emerging-market stocks fell, capping the biggest weekly drop since August, as China’s money-market rates jumped and concern grew that earnings will falter. Indonesia’s rupiah posted its best week since June 2009.

The MSCI Emerging Markets Index retreated 0.3 percent to 1,027.27, extending its weekly slump to 1.4 percent. The Shanghai Composite Index (SHCOMP) slid to the lowest level in seven weeks as Great Wall Motor Co. (601633) tumbled 10 percent after earnings missed analysts’ estimates. Oil company OGX Petroleo e Gas Participacoes SA (OGXP3) sank 19 percent, pacing losses in Brazil’s Ibovespa. The rupiah strengthened the most since Sept. 19.

Stocks fell as China’s money-market rate completed the biggest weekly jump since a cash squeeze in June after the central bank refrained from injecting funds through open-market operations. More than half of the 125 companies that reported quarterly earnings in the gauge for developing nations missed sales estimates, while revenue increased by an average 2.1 percent, according to data compiled by Bloomberg.

“Uncertainty in China suggests that people maybe decided to be a little more cautious,” Derrick Irwin, a portfolio manager of the Wells Fargo Advantage Emerging Markets Equity Fund in Boston, said by phone. His firm manages $223.8 billion. “These concerns come up every time the money-market rate spikes. As we look at the earnings season, it’s been at worst a mixed bag.”

Nine out of 10 groups in the MSCI Emerging Markets Index fell, led by utility, industrial and technology companies. The gauge for developing nations has dropped 2.7 percent this year to trade at 10.6 times projected earnings, compared with the valuation of 14.3 for the MSCI World Index.

Emerging ETF

The iShares MSCI Emerging Markets Index exchange-traded fund advanced 0.5 percent to $42.75. The Chicago Board Options Exchange Emerging Markets ETF Volatility Index, a measure of options prices on the fund and expectations of price swings, retreated 2.3 percent to 21.01.

Brazil’s Ibovespa posted the biggest weekly decline in almost two months. Oil company OGX tumbled after Valor Economico reported a round of talks with bondholders ended Oct. 23 with no agreement reached.

Russian stocks rose as oil, the nation’s main export earner, climbed. OAO Lukoil (LKOH) gained for the first time this week. Benchmark gauges in Hungary and Turkey also advanced. Tofas Turk Otomobil Fabrikasi AS, the Turkish carmaker part-owned by Fiat SpA, climbed for a second day on bets plans to roll out a new vehicle will boost revenue from exports.

China, India

The Shanghai Composite Index fell for a fourth day, capping the longest stretch of losses in almost three months. Great Wall Motor led declines for consumer-discretionary companies reliant on economic growth.

India’s S&P BSE Sensex ended three weeks of gains as Bharat Heavy Electricals Ltd., the largest maker of power equipment, slumped to a one-month low. ITC Ltd. (ITC), India’s biggest tobacco company, slid after its sales trailed estimates.

The rupiah rose 2.8 percent since Oct. 18 as of 4:37 p.m. in Jakarta, beating all 24 emerging-market currencies tracked by Bloomberg, prices from local banks show.

The premium investors demand to own emerging-market debt over U.S. Treasuries fell one basis points, or 0.01 percentage point, to 311 basis points, according to JPMorgan Chase & Co.

To contact the reporters on this story: Julia Leite in New York at jleite3@bloomberg.net; Lyubov Pronina in London at lpronina@bloomberg.net; Rajhkumar K Shaaw in Mumbai at rshaaw@bloomberg.net

To contact the editor responsible for this story: Tal Barak Harif at tbarak@bloomberg.net

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