Emerging-market stocks dropped to the lowest level in a month as OTP Bank Nyrt. dragged down Hungarian shares. The Czech koruna tumbled the most on record as the central bank approved the first currency sales in 11 years.
The MSCI Emerging Markets Index slipped 0.6 percent to 1,010.19, dropping for a sixth day in the longest slide since Aug. 22. The Budapest Stock Exchange Index retreated 1.7 percent as OTP, Hungary’s largest lender, plunged after the central bank urged the introduction of bankruptcy rules to protect household borrowers. The koruna posted the worst performance among the 31 major currencies tracked by Bloomberg. Brazil’s Ibovespa dropped to the lowest level in a month as Vale SA retreated.
Stocks joined a global slump in equities after a report showing faster economic growth in the U.S. spurred concern the Federal Reserve will scale back stimulus sooner than expected. European Central Bank President Mario Draghi warned the euro area risks a “prolonged period” of low inflation as the bank cut its benchmark interest rate to a record.
“We’ve had a push out of tapering which gave EM stocks some breathing room, but we’re still concerned about growth headwinds for 2014,” Michelle Gibley, director of international research at San Francisco-based Charles Schwab Corp., said by phone. The firm manages $2.15 trillion in client assets.
All 10 groups in the MSCI Emerging Markets Index dropped today, led by utility and commodity shares. The broad measure trades at 10.5 times projected earnings, compared with the valuation of 14.2 for the MSCI World Index.
The iShares MSCI Emerging Markets Index exchange-traded fund declined 1.8 percent to $41.25. The Chicago Board Options Exchange Emerging Markets ETF Volatility Index, a measure of options prices on the fund and expectations of price swings, advanced 5.7 percent to 24.79.
Emerging-market economies grew last month at the quickest pace since March as global demand for manufacturing and services improved, HSBC Holdings Plc said, citing a survey of purchasing managers. The HSBC Emerging Markets Index, which is compiled by London-based Markit Economics and tracks conditions at more than 5,000 companies, rose to 51.7 in October. A value of more than 50 indicates expansion.
“With tapering fears in abeyance for now and Europe out of recession, capital flows and external demand should support emerging market sentiment and performance through the year end,” said Simon Williams, the Dubai-based chief Middle East economist at HSBC Holdings Plc., in the report. “The continued gains in China data are particularly encouraging, substantiating our view that fresh stimulus has helped growth find a floor.”
Brazil’s Ibovespa fell for a third day as Telefonica Brasil SA (VIVT4) led Brazilian phone companies lower after reporting quarterly earnings that trailed analysts’ forecasts. Vale, the largest iron-ore producer, retreated 3.3 percent.
The Micex Index posted the biggest increase since Oct. 18 in Moscow. OAO Severstal added 3.5 percent, the largest advance on the benchmark gauge, after UBS AG added the steelmaker to its most-preferred stock list.
The Budapest Stock Exchange Index slid the most since Aug. 27 as OTP tumbled 4.7 percent. The Czech koruna tumbled after the Ceska Narodni Banka today started selling the currency for the first time in more than a decade to keep it “near” 27 per euro and push inflation back toward its target.
China’s stocks sank to a one-week low, led by technology and health-care companies, as money rates climbed before the start of a Communist Party meeting at the end of the week. Guangzhou Baiyunshan Pharmaceuticals Holdings Co. plunged to the lowest level in seven months to pace losses for drugmakers. Software maker Neusoft Corp. declined 2.9 percent.
India’s S&P BSE Sensex (SENSEX) fell for a third day, erasing the biggest gain in more than a week. State Bank of India dropped 3.2 percent, leading a gauge of banking shares down the most in three weeks. Infosys Ltd. (INFO) climbed to the highest level since January 2011 as technology companies increased.
Indonesia’s rupiah and 10-year government bonds advanced for the first time in eight days after the nation’s foreign-exchange reserves rose for a third month.
The premium investors demand to own emerging-market debt over U.S. Treasuries rose three basis points, or 0.03 percentage point, to 328 basis points, according to JPMorgan Chase & Co.
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