Emerging Stocks Fall Most in Six Weeks on China

Emerging-market stocks slumped the most in six weeks as reports showed Chinese manufacturing growth slowed and political tension escalated in Thailand. The Turkish lira touched a record low against the dollar.

The MSCI Emerging Markets Index fell 1.2 percent to 990.39 in New York, its steepest drop since Nov. 21. The Hang Seng China Enterprises Index (HSCEI) of mainland companies listed in Hong Kong slid 1 percent, the biggest loss since Dec. 20. The baht weakened 0.3 percent to the lowest since February 2010, while Thai stocks slumped the most among 94 gauges tracked by Bloomberg. The lira depreciated 1.2 percent versus the dollar and the Ibovespa (IBOV) fell for the first time in three days.

A Purchasing Managers’ Index compiled by China’s statistics bureau and logistics federation declined yesterday to a four-month low. Groups opposed to Thailand’s caretaker Prime Minister Yingluck Shinawatra plan to surround government ministries and occupy 20 major intersections in Bangkok on Jan. 13 until she agrees to step down. Turkey’s government is fighting back against the judiciary after a graft probe forced the resignation of three ministers.

“PMI data in China and political turmoil in Turkey, none of this is conducive to create good sentiment toward emerging markets,” Christian Keller, the head of emerging-market research at Barclays Plc in London, said by phone. “Today it is mainly China. People are a bit disappointed.”

The MSCI emerging-markets gauge trades at 10.4 times its 12-month projected earnings, compared with 14.7 times for the MSCI World Index, data compiled by Bloomberg show.

Lira Record

China’s PMI fell to 51 from 51.4, missing the 51.2 median estimate in a Bloomberg News survey of economists. HSBC Holdings Plc and Markit Economics published a separate gauge today that fell to 50.5 from 50.8, in line with the average prediction. A figure above 50 indicates expansion.

The lira dropped to as low as 2.1886 per dollar, the weakest since at least February 1981. The Borsa Istanbul 100 Index (XU100) slipped 1.2 percent and the local currency-denominated debt posted the second-largest annual loss among 31 developing nations tracked by Bloomberg in 2013.

The government raised special consumption taxes on some cars, alcoholic drinks, cigarettes and mobile phones, according to a decision published in the official gazette yesterday. One-year interest-rate swaps, a measure of investor expectations for rates, rose 11 basis points to 9.04 percent, the highest since Aug. 26.

Attempted Coup

Prime Minister Recep Tayyip Erdogan has labeled the graft investigation an attempted coup, fired hundreds of police chiefs and replaced 10 ministers in his 26-member cabinet last week.

Israel’s shekel depreciated 0.5 percent, weakening the most in three weeks as Tel Aviv traders at Forex Capital Markets LLC and Bank Leumi said the central bank bought at least $100 million to curb the currency’s rally to boost exports and the economy.

South Africa’s rand fell 1.8 percent to the lowest level since 2008.

The Ibovespa slumped 1.5 percent amid concern that higher interest rates in Brazil will drive investors away from equities and into fixed-income securities. Homebuilder Gafisa SA tumbled 6 percent and freight shipping company All America Latina Logistica SA tumbled to an eight-year low.

The Dubai Financial Market General Index (DFMGI) rose 3 percent, the most since Sept. 15, as Dubai Islamic Bank PJSC jumped 12 percent percent, the most in more than five years.

Poland’s WIG20 Index added 1.2 percent to a two-week high while Lithuania’s benchmark stock index gained 3 percent. Russian markets are closed for a New Year holiday.

Yuan Record

Thailand’s SET Index of equities tumbled 5.9 percent to the lowest level since August 2012 amid concern prolonged political unrest will spur capital outflows. The baht depreciated for an 11th day, according to prices from regional banks compiled by Bloomberg, the longest losing streak on record.

The yuan rose to a 20-year high on optimism China will accelerate measures to ease capital-account controls. China’s currency strengthened 0.1 percent to the highest since December 1993.

South Korea’s Kospi index tumbled 2.2 percent, the steepest decline since July 2012. Samsung Electronic Co. (005930), the world’s biggest maker of smartphones and televisions, dropped 4.6 percent after LIG Investment cut its price target for the stock to 1.75 million won from 1.9 million won.

The iShares MSCI Emerging Markets Index exchange-traded fund slumped 3.8 percent to $40.19. The Chicago Board Options Exchange Emerging Markets ETF Volatility Index, a measure of options prices on the fund and expectations of price swings, surged 13 percent to 24.55.

The premium investors demand to own emerging-market debt over U.S. Treasuries rose three basis points, or 0.03 percentage points, to 311 basis points, according to JPMorgan Chase & Co. indexes.

To contact the reporters on this story: Harry Suhartono in Jakarta at hsuhartono@bloomberg.net; Lyubov Pronina in London at lpronina@bloomberg.net

To contact the editors responsible for this story: Daliah Merzaban at dmerzaban@bloomberg.net; Tal Barak Harif at tbarak@bloomberg.net

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