Emerging-Market Stocks Fall as Turkey Leads World Losses

Emerging-market stocks dropped for a second day on speculation the global economy will falter amid a weaker Chinese property market. Turkey’s shares led world losses on concern the country’s political situation will worsen.

The MSCI Emerging Markets Index fell 0.3 percent to 955.54. The Borsa Istanbul 100 Index declined the most among 94 gauges as opposition leaders said Prime Minister Recep Tayyip Erdogan should resign over a leaked tape in which he allegedly discussed hidden funds, a claim he denied. The Shanghai Composite Index tumbled as China Vanke Co. led a rout in developers. The hryvnia slid to a record low after Russia warned Ukraine may default, while interim leaders delayed a vote on a unity government.

Equities retreated after China’s Industrial Bank Co. (601166)’s suspension of mezzanine financing for developers fueled speculation lenders may pare real-estate funding. The decision heightened concerns about a slowdown of the world’s second-largest economy as the industry already grapples with falling sales. The yuan had the biggest slide since 2010.

“Emerging markets are feeling some pressure as the world resets to a slower rate of Chinese growth,” Stephen Wood, the New York-based chief market strategist at Russell Investments, said by phone. His firm oversees more than $256 billion. “The data we’ve been getting recently is confirming the softer, more challenging data we saw previously.”

The iShares MSCI Emerging Markets Index exchange-traded fund fell 1.1 percent to $38.98. The premium investors demand to own emerging-market debt over U.S. Treasuries rose 0.02 percentage point to 327 basis points, according to JPMorgan Chase & Co.

Brazil, Turkey

Brazil’s Ibovespa fell for the first time in five days as raw-material exporters including iron-ore producer Vale SA (VALE) dropped. The nation’s swap rates sank on speculation that policy makers convening for a two-day meeting will limit borrowing cost increases to a quarter-percentage point.

Turkish stocks fell the most since Dec. 25. The recording of what sounds like Erdogan and his son Bilal discussing ways to conceal funds from a police investigation put pressure on Turkish assets on investor concern the country’s political situation will worsen. The premier’s office called the tape an “unethical” montage and said it would take legal action.

The Micex Index (INDEXCF) slid in Moscow as oil and gas shares dropped and concern grew that Ukraine will be unable to pay for energy imports. Russia sees a “high” chance of Ukraine defaulting on its sovereign debt, Deputy Finance Minister Sergei Storchak said.

The Shanghai Composite Index declined the most in five months as China Vanke tumbled 8 percent. The yuan tumbled on speculation the central bank wants an end to its steady appreciation to ward off speculators before a possible widening of the trading band.

To contact the reporters on this story: Gabrielle Coppola in New York at gcoppola@bloomberg.net; Maria Levitov in London at mlevitov@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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