Emerging-market stocks fell for a 10th day as commodity producers slumped on concern demand from China will slow. OAO Mechel sank as Russia’s largest coking coal producer holds talks with banks about restructuring debt.
The MSCI Emerging Markets Index retreated 1.2 percent to 979.88, capping the longest slide since 2006. Benchmark equity gauges from Russia to China and South Africa decreased at least 1.8 percent. Mechel plunged 41 percent in Moscow, while China Petroleum & Chemical Corp. (386) and coal producer China Shenhua Energy Co. paced losses in energy producers. India’s rupee advanced the most in almost a month after the nation’s central bank said the current-account deficit will narrow 36 percent.
Stocks fell as a Chinese top-level Communist Party meeting yesterday disappointed investors looking for details on policy shifts to combat a slowdown. In a testimony released after the market closed, Janet Yellen, nominated to be the next chairman of the Federal Reserve, said the U.S. economy and labor market are performing “far short of their potential” and must improve before the central bank can begin reducing stimulus.
“It’s political uncertainty in China, but the big question is how they are going to pull off this magic trick of spurring domestic demand,” Wayne Lin, a portfolio manager at Baltimore-based Legg Mason Inc., which oversees $656 billion, said by phone. “The global economy is being flooded with liquidity because the U.S. is being propped up by this unconventional monetary policy. If that gets withdrawn, what happens to China and what happens to emerging markets?”
All 10 groups in the MSCI Emerging Markets Index dropped today, as commodity shares fell at least 0.9 percent. The broad measure trades at 10.3 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 0.2 percent to $40.80. The Chicago Board Options Exchange Emerging Markets ETF Volatility Index, a measure of options prices on the fund and expectations of price swings, decreased 1.7 percent to 23.05.
Brazil’s Ibovespa rose from the lowest in 10 weeks as homebuilder Gafisa SA (GFSA3) gained amid speculation that policy makers will limit interest-rate increases to support the economy. State-controlled oil company Petroleo Brasileiro SA advanced after agreeing to sell assets in Peru to PetroChina Co.
The Micex Index (INDEXCF) slumped 2.2 percent, led by metal producers. Mechel sank to the lowest level on record amid speculation that an investor facing a margin call may have sold shares. OAO Severstal, Russia’s second-largest steel producer, retreated 6.1 percent. Benchmark gauges in Poland and Hungary fell at least 1.3 percent, while Turkish stocks advanced.
The FTSE/JSE Africa All Shares Index tumbled the most since July 5, led by BHP Billiton Plc and Anglo American Plc.
The Shanghai Composite Index (SHCOMP) dropped 1.8 percent, the biggest decline since Sept. 26. China Petroleum & Chemical, known as Sinopec, lost 1.7 percent. China uses its biggest oil companies, of which PetroChina is the largest, to control domestic fuel prices and secure energy supplies from overseas to meet the burgeoning needs of the economy. China Shenhua Energy, the largest coal producer, retreated 1.1 percent.
Indian (SENSEX) stocks declined, sending the benchmark index to a five-week low, after consumer prices rose more than forecast and factory output growth missed estimates. HDFC Bank Ltd. (HDFCB) slid to a five-week low, pacing losses in a gauge of lenders, which fell for an eighth day. The rupee added 0.6 percent to 63.32 per dollar in Mumbai, the biggest gain since Oct. 17, according to prices from local banks compiled by Bloomberg.
South Korea’s won declined to a one-month low, while government bonds gained. The nation will allow investors to short sell financial stocks from tomorrow, signaling that regulators believe banks and insurers are strong enough to withstand the lifting of a ban imposed during the 2008 crisis.
The premium investors demand to own emerging-market debt over U.S. Treasuries rose two basis points, or 0.02 percentage point, to 339 basis points, according to JPMorgan Chase & Co.
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