Emerging Stocks Fall on Earnings Concern as Real Tumbles

Emerging-market stocks fell to the lowest level in two weeks as Hyundai Motor Co. (005380) and Kia Motors Corp. (000270) tumbled amid concern earnings will falter. Brazil’s real slumped to a three-month low amid disappointing economic data.

The MSCI Emerging Markets Index dropped 1.1 percent to 1,002.71. Hyundai and Kia, South Korea’s biggest automakers, slid at least 4.2 percent after saying sales decreased. The Borsa Istanbul National 100 Index retreated 2.5 percent as banks plunged, while OAO Gazprom (GAZP) drove losses in Moscow. Brazil’s real slumped after a government report showed Latin America’s largest economy contracted more than estimated by analysts.

More than half of the 564 companies in the benchmark for developing nations that reported third-quarter earnings missed analysts’ estimates, according to data compiled by Bloomberg. A report yesterday showed U.S. manufacturing increased at the fastest pace in more than two years last month, bolstering the case for the Federal Reserve to start tapering stimulus.

“Fed tapering concerns continue to weigh on markets’ minds,” Mohammed Kazmi, a London-based strategist at Royal Bank of Scotland Group Plc, said by e-mail. “The underperformance of emerging-market stocks over the last couple of days is on the back of some profit-taking.”

The iShares MSCI Emerging Markets Index exchange-traded fund retreated 0.3 percent to $41.32. The Chicago Board Options Exchange Emerging Markets ETF Volatility Index, a measure of options prices on the fund and expectations of price swings, climbed 5.3 percent to 26.11.

Brazil, Turkey

Brazil’s Ibovespa fell to a three-month low as Rossi Residencial SA (RSID3) led a decline among homebuilders. The real declined after economic data added to speculation the central bank will limit borrowing cost increases.

The Borsa Istanbul National 100 Index fell the most in three weeks as Turkiye Garanti Bankasi AS (GARAN) drove losses in lenders. Russian stocks slid to the lowest since Sept. 13 as Gazprom retreated on concern closer ties with Ukraine will hurt earnings and steelmakers sank amid lower metal prices. Benchmark gauges in the Czech Republic and Poland also dropped.

The FTSE/JSE Africa All Shares Index slumped to the lowest level since Oct. 14 in Johannesburg as AngloGold Ashanti Ltd. plunged 6.2 percent. South Africa’s current-account deficit widened to 6.8 percent of gross domestic product in the third quarter, the biggest gap in more than five years, as a weak rand boosted import costs while strikes and subdued global demand hurt exports.

Hyundai, Kia

South Korea’s Kospi Index (KOSPI) dropped 1.1 percent as Hyundai and Kia struggled to sell more cars in their home turf as domestic sales slid 12 percent last month, according to regulatory filings.

Indian stocks retreated from a one-month high, led by lenders and industrial companies. Bank of India tumbled 3.9 percent, while engineering company Larsen & Toubro Ltd. (LT) dropped for the first time in eight days.

China’s stocks rose to the highest level since October as a drop in money-market rates eased concern of a cash squeeze before the resumption of initial public offerings next month. Baoshan Iron & Steel Co. (600019) led gains for steelmakers after the China Securities Journal reported the government is taking new measures to curb industry overcapacity. Industrial & Commercial Bank of China Ltd. retreated 1.3 percent.

The premium investors demand to own emerging-market debt over U.S. Treasuries rose one basis point, or 0.01 percentage point, to 337 basis points, according to JPMorgan Chase & Co.

To contact the reporters on this story: Zahra Hankir in London at zhankir@bloomberg.net; Ian Sayson in Manila at isayson@bloomberg.net

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

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