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Most Emerging Stocks Fall as Ibovespa Leads World Losses

Most emerging-market stocks declined as homebuilders led Brazil’s Ibovespa (IBOV) to the biggest slump among global equity gauges. Russian stocks slid after Bank of America Merrill Lynch cut its outlook for the nation’s shares.

More than 400 stocks in the MSCI Emerging Markets Index fell, while 379 gained. The gauge dropped less than 0.1 percent to 1,016.19. The iShares MSCI Emerging Markets Index exchange-traded fund rose 0.3 percent as Federal Reserve officials said weakness in the U.S. economy warrants continued stimulus. The Ibovespa fell 0.8 percent as PDG Realty SA Empreendimentos & Participacoes posted a wider-than-forecast loss.

More than half of the companies that reported quarterly earnings in the gauge for developing nations missed analysts’ sales estimates, according to data compiled by Bloomberg. The Fed’s policy of seeking to drive down the U.S. unemployment rate is effective, and the level of slack in the economy justifies an accommodative stance, according to two separate papers by top officials at the U.S. central bank.

“You’ve had some real headwinds for some of the companies and people are still very skeptical,” Michael Holland, who oversees more than $4 billion as chairman of Holland & Co. in New York, said in a phone interview. “The Fed tapering is beginning to be less of a problem for the U.S. market, but on the other hand, it causes currency problems for other countries. There’s a currency element that also works against the emerging markets.”

Technology Shares

A measure of technology shares on the MSCI Emerging Markets Index dropped today, while commodity companies advanced. The broad measure trades at 10.6 times projected earnings, compared with the valuation of 14.4 for the MSCI World Index.

The iShares MSCI Emerging Markets Index exchange-traded fund advanced to $42.01. The Chicago Board Options Exchange Emerging Markets ETF Volatility Index, a measure of options prices on the fund and expectations of price swings, slid 1.6 percent to 23.46.

Brazil’s Ibovespa retreated to the lowest level since Oct. 11. It posted the steepest drop among 94 equity gauges tracked by Bloomberg. PDG sank 8.9 percent. The real swung between gains and losses after touching an eight-week low as Finance Minister Guido Mantega sought to reassure investors that the government is taking steps to keep the budget deficit in check.

Russia, India

Russian stocks dropped to the lowest level in more than four weeks as Bank of America cut its outlook for equities in the world’s biggest energy exporter on concern oil prices will fall. OAO Pharmstandard, the nation’s biggest drugmaker, fell 4.3 percent. Benchmark gauges in the Czech Republic, Turkey and Poland gained at least 1 percent.

India’s S&P BSE Sensex (SENSEX) lost 0.4 percent, reversing an earlier gain. State Bank of India Ltd., the nation’s biggest lender, fell the most in more than a month. The S&P BSE Bankex index dropped for a third day, paring last month’s 19 percent surge. The rupee fell the most in two months.

China’s stocks declined to a one-week low, led by consumer discretionary and financial companies, before the start of a Communist Party meeting later this week. Great Wall Motor Co. (601633) sank 8.5 percent. Ping An Bank Co. and Poly Real Estate Group Co. slid at least 2.1 percent.

Egypt’s EGX 30 Index rallied to the highest level since 2011 as the trial of former President Mohamed Mursi was delayed until Jan. 8.

The premium investors demand to own emerging-market debt over U.S. Treasuries rose two basis points, or 0.02 percentage point, to 323 basis points, according to JPMorgan Chase & Co.

To contact the reporters on this story: Julia Leite in New York at jleite3@bloomberg.net; Piotr Bujnicki in Warsaw at pbujnicki@bloomberg.net; Harry Suhartono in Jakarta at hsuhartono@bloomberg.net

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

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