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Emerging-Market ETF Declines on China as Turkey’s Lira Tu

The iShares MSCI Emerging Markets Index exchange-traded fund slid to a four-month low as China’s manufacturing trailed estimates. Turkey’s lira sank to a record low after the central bank made an unscheduled intervention.

The developing-nation ETF slipped 2.5 percent to $39.27 at the close in New York. The MSCI Emerging Markets Index fell 1.3 percent to 963.98. The Shanghai Composite Index slid after rising the most in two months yesterday. The Borsa Istanbul 100 Index led losses among world equity gauges as the lira dropped for a ninth day. Brazil’s Ibovespa (IBOV) erased gains, as Vale SA (VALE) plunged. Argentina’s peso extended its biggest slide in 12 years as the central bank scaled back its intervention to control the rate in a bid to preserve international reserves.

China’s manufacturing may contract for the first time in six months, adding to stresses in the world’s second-biggest economy, according to a gauge released by HSBC Holdings Plc (HSBA) and Markit Economics. The preliminary reading of 49.6 for January in a Purchasing Managers’ Index was below a final figure of 50.5 in December and all 19 estimates in a Bloomberg News survey.

“We see a lot of people are nervous about the numbers from China,” David Kelly, the chief global strategist at JPMorgan Funds in New York, said in a telephone interview today. His firm oversees about $400 billion in mutual funds. “China needs to come up with a way to keep its economic growth stable, but it’s easier said than done.”

Biggest Declines

All 10 groups in the emerging-market gauge fell, led by financial companies. The Chicago Board Options Exchange Emerging Markets ETF Volatility Index, a measure of options prices on the fund and expectations of price swings, climbed 14 percent to 23.31.

Brazil’s Ibovespa fell for the fifth time in six sessions as commodity exporters including iron-ore producer Vale sank on concern that manufacturing growth is slowing in China, Brazil’s biggest trading partner. Steelmaker Cia. Siderurgica Nacional SA fell for a fifth day, the longest losing streak since June.

In Argentina, policy makers pared back dollar sales aimed at propping up the local currency to preserve international reserves that have fallen to a seven-year low. The central bank sold $100 million late in today’s session to trim losses after the peso posted its biggest decline since a devaluation in 2002.

Turkey, Russia

The Borsa Istanbul 100 Index sank 2.9 percent as Turkiye Garanti Bankasi AS drove declines in lenders. The lira capped the longest slide since 2001. Russia’s Micex Index erased gains in Moscow as United Co. Rusal, the world’s largest aluminum producer, sank 3.6 percent.

South Africa’s rand fell, breaching 11 per dollar for the first time since October 2008, on concern a pay strike at the world’s biggest platinum mines and a manufacturing contraction in China will dent South African exports.

The Shanghai Composite Index slumped, led by energy and material stocks. Jiangxi Copper Co., the biggest Chinese producer of the metal, slid 1.2 percent, while PetroChina Co., the largest energy company, lost 0.9 percent. The Hang Seng China Enterprises Index sank 2.1 percent as Industrial & Commercial Bank of China Ltd. tumbled.

Indian stocks advanced, with the benchmark index climbing to a record, after Larsen & Toubro Ltd. (LT) and Housing Development Finance Corp. reported earnings that exceeded estimates. Axis Bank Ltd. rose the most in seven weeks. Drugmaker Sun Pharmaceutical Industries Ltd. had its biggest two-day rally since October.

Dubai’s Stocks

Dubai’s benchmark stock index rose the most since September on speculation the emirate reached an agreement with neighboring Abu Dhabi on $20 billion of debt. The DFM General Index (DFMGI) jumped 3.6 percent. Arabtec Holding Co. (ARTC), which helped build the world’s tallest tower, surged 9.8 percent, while Emirates NBD PJSC, the sheikhdom’s biggest bank, rose to the highest since 2008. Abu Dhabi’s index gained 1.7 percent.

The premium investors demand to own emerging-market debt over U.S. Treasuries rose 12 basis points, or 0.12 percentage point, to 331 basis points, according to JPMorgan Chase & Co.

To contact the reporters on this story: Elena Popina in New York at epopina@bloomberg.net; Maria Levitov in London at mlevitov@bloomberg.net; Zahra Hankir in London at zhankir@bloomberg.net

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

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