Emerging-market stocks dropped to a four-month low after Chinese economic data bolstered concern growth is slowing. South Korea’s won fell the most in six months amid speculation the central bank will cut interest rates.
The MSCI Emerging Markets Index slipped 0.7 percent to 972.42. The Shanghai Composite Index (SHCOMP) sank to a five-month low after Chinese gauges of manufacturing and services industries fell. Russia’s Micex Index slumped 2.5 percent, led by OAO Gazprom (GAZP), while Brazilian retailer Cia. Hering (HGTX3) drove the Ibovespa down. Turkish stocks rose the most in the world as bank valuations near a five-year low attracted investors. The won depreciated as a weak Japanese yen threatens exports.
Commodity shares paced losses in developing nations after HSBC Holdings Plc (HSBA) and Markit Economics data showed that a non-manufacturing index in China declined to 50.9 in December. Investors also watched U.S. reports showing that growth in U.S. service industries unexpectedly weakened last month while factory orders rose in November. The measure for emerging-market stocks has dropped 3 percent this year after trailing shares in developed countries by the most since 1998.
“China is a major user of commodities. That could explain why emerging markets are taking a hit,” Peter Jankovskis, who helps oversee $3.5 billion as co-chief investment officer of Lisle, Illinois-based OakBrook Investments LLC, said by phone. “Until we see a significant pickup in global growth, emerging markets will continue to struggle.”
The iShares MSCI Emerging Markets Index exchange-traded fund fell 1 percent to $39.74. The Chicago Board Options Exchange Emerging Markets ETF Volatility Index, a measure of options prices on the fund and expectations of price swings, added 0.1 percent to 24.24.
Most Brazilian stocks fell as Cia. Hering led retailers lower after economists reduced their growth forecasts for the country. Hypermarcas SA, a maker of consumer products, was the worst performer on the MSCI Brazil/Consumer Staples index, which dropped to a four-month low.
The Micex Index slumped the most since June 11 in Moscow as Gazprom slid 2.5 percent. The Borsa Istanbul National 100 Index rallied 3.1 percent, led by banks. Benchmark gauges in Hungary and the Czech Republic retreated.
South Africa’s rand extended gains, strengthening for the first time in five days, after Moody’s Investors Service said the nation would probably retain its investment-grade credit rating. Bonds pared declines.
The Shanghai Composite Index slid 1.8 percent to its lowest level since Aug. 8. China Railway Group Ltd. (390) plunged the most in more than two months after the company said its president died in an accident. CSR Corp., the nation’s biggest train maker, fell 3.9 percent. China Shenhua Energy Co. dropped 3.5 percent after BNP Paribas SA said coal prices may decrease.
Indian stocks dropped for a fourth day, led by power companies and lenders, as the benchmark index fell to its lowest level in three weeks. Tata Power Co. had its biggest four-day retreat since Aug. 7. ICICI Bank Ltd. (ICICIBC) declined to its lowest level in six weeks. Coal India Ltd. (COAL), the world’s largest miner of the fuel, dropped to a one-month low.
The won dropped posted the biggest decline since June 20. The Thai baht dropped to its lowest since 2010 after overseas funds pulled cash from the nation’s debt amid two months of political protests that are sapping investor confidence.
The premium investors demand to own emerging-market debt over U.S. Treasuries rose three basis points, or 0.03 percentage point, to 312 basis points, according to JPMorgan Chase & Co.
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