Emerging-Market Stocks Tumble as China Leads World Slump

Emerging-market stocks declined for a second day after a report showing the biggest plunge in Chinese exports since 2009 spurred concern the global economy will falter. Brazil’s Ibovespa approached a bear market.

The MSCI Emerging Markets Index dropped 1.2 percent to 955.02. The Shanghai Composite Index led losses among the 94 world gauges tracked by Bloomberg, while the yuan weakened after China’s central bank cut the currency’s fixing by the most since July 2012. The Ibovespa retreated to an eight-month low, extending its slump from Oct. 22 to more than 19 percent. Malaysian Airline System Bhd. (MAS) tumbled to a record low after the national carrier’s Flight 370 disappeared two days ago.

Commodity shares dropped the most among 10 groups in the emerging-market gauge on concern a slowdown in China will curb demand for raw materials. A decrease in exports at the world’s second-largest economy highlight the challenges for Premier Li Keqiang in achieving this year’s growth target of 7.5 percent.

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“The question is how much it’s going to continue to slow,” Walter Todd, who oversees about $990 million as chief investment officer of Greenwood Capital Associates LLC in Greenwood, South Carolina, said by phone. “The debate around whether China is going to have a hard landing has been going on, and nobody seems to come to a consensus.”

The iShares MSCI Emerging Markets Index exchange-traded fund fell 0.7 percent to $39.25. Twenty out of 24 developing-nation currencies declined, led by the Malaysian ringgit. The premium investors demand to own emerging-market debt over U.S. Treasuries rose 0.01 percentage point to 310 basis points, according to JPMorgan Chase & Co.

Swap Rates

Brazil’s Ibovespa fell to the lowest since July as commodity exporters including iron-ore producer Vale SA (VALE5) tumbled. The nation’s swap rates rose as a report showed inflation accelerated more than forecast, adding to speculation that the central bank will keeping raising borrowing costs.

Benchmark gauges in Hungary, Czech Republic and Poland retreated more than 1 percent. Russia’s stock market is closed for a holiday. Ukraine began military drills as Russian forces tightened their hold on the Crimean peninsula and the Foreign Ministry in Moscow warned of “lawlessness” in the former Soviet republic’s eastern provinces.

China’s CSI 300 Index (SHSZ300) of the largest Chinese stocks plunged to the lowest level in five years, while Shanghai Composite Index tumbled 2.9 percent, the most since June. The yuan fell 0.2 percent to 6.1385 per dollar. Money-market rates slumped to a 21-month low amid speculation demand for cash is diminishing as economic growth weakens.

Malaysian Airline System sank 4 percent for its lowest level on record after falling as much as 18 percent. The benchmark FTSE Bursa Malaysia KLCI Index slid 0.6 percent and the ringgit slumped 0.8 percent against the dollar.

To contact the reporters on this story: Julia Leite in New York at jleite3@bloomberg.net; Lyubov Pronina in London at lpronina@bloomberg.net; Harry Suhartono in Jakarta at hsuhartono@bloomberg.net

To contact the editors responsible for this story: Tal Barak Harif at tbarak@bloomberg.net Rita Nazareth, Stephen Kirkland

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