Emerging-market stocks sank to the lowest level this month as signs of an economic slowdown in China and South Korea outweighed European leaders’ accord on ways to fight the debt crisis and U.S. consumer confidence that topped estimates.
The MSCI Emerging Markets Index fell 1.4 percent to 934.18 at the close in New York, paring an earlier drop of 2.3 percent. The gauge is at its lowest since Nov. 30 and down 2.8 percent this week. The Hang Seng China Enterprises Index dropped 3.2 percent in Hong Kong and the Kospi Index sank 2 percent in Seoul. Brazil’s Bovespa rose 1.4 percent, reversing a weekly loss. Russia’s Micex Index slid 4.1 percent ahead of political protests this weekend.
China’s industrial output grew at the slowest pace in two years in November, data today showed. South Korea’s economic growth is likely to slow to 3.7 percent in 2012 from 3.8 percent this year, the central bank said. Stocks fell even as European Union leaders added 200 billion euros ($267 billion) to their crisis-fighting war chest and tightened anti-deficit rules to stem the region’s sovereign credit crisis.
“The Chinese economy will slow down next year much more than what the market expected,” said Adrian Mowat, JPMorgan Chase & Co.’s Hong Kong-based chief Asian and emerging-market strategist, said in a Bloomberg UTV interview today. “Europe will continue to provide volatility, but probably it is going to be the main signal of direction in markets.”
MSCI’s emerging-markets index has declined 19 percent this year, compared with the 7.2 percent drop in the MSCI World Index amid concerns of faltering growth in the U.S., Europe and China. The developing-nations gauge trades for 9.7 times estimated earnings, compared with its four-year average of 12.2 times, according to data compiled by Bloomberg.
The Czech Republic’s PX gauge lost 0.3 percent after a report showed the economy grew at the slowest pace in seven quarters in July through September.
“We are concerned about the near-term outlook for global emerging markets as the EU summit seems to have failed to provide break-through steps to address the EU crisis,” Benoit Anne, London-based head of emerging-market strategy at Societe Generale SA, wrote in an e-mailed report to clients today.
The South Korean won led declines among emerging-market currencies, weakening 1.3 percent versus the dollar. The Indian rupee lost 0.5 percent. South Africa’s rand added 2.1 percent and the Brazilian real strengthened 1.5 percent as commodities gained following U.S. consumer confidence data.
The Thomson Reuters/University of Michigan preliminary index of consumer sentiment for December rose to 67.7 from a final November reading of 64.1. The gauge was projected to rise to 65.8, according to the median forecast of 73 economists surveyed by Bloomberg.
Copper advanced 2.1 percent and silver gained 2.3 percent in New York.
The Bovespa reversed losses for the week as a report showed inflation trailing economists’ estimates. The first preview of the IGP-M report showed Brazil inflation was 0.04 percent this month through yesterday, according to the Rio de Janeiro-based Getulio Vargas Foundation. That compared to a median estimate of 0.42 percent in a Bloomberg survey of 17 economists.
Brazilian mining companies Vale SA and MMX Mineracao & Metalicos SA followed metals prices higher.
Airline Gol Linhas Aereas Inteligentes SA advanced the most in the Bovespa this week, surging 12 percent, as Delta Air Lines Inc. invested $100 million in the company.
Taiwan’s Taiex Index and the BSE India Sensitive Index, or Sensex, each slid more than 1 percent.
Chinese industrial output rose 12.4 percent last month, the slowest pace since August 2009, according to statistics bureau data today. Consumer prices rose 4.2 percent in November from a year earlier, slowing from a 5.5 percent gain in the previous month, the bureau reported earlier. The median estimate of economists surveyed by Bloomberg was for a 4.5 percent increase.
Jiangxi Copper Co., China’s biggest copper producer, fell 5.4 percent in Hong Kong. PetroChina Co., the nation’s second-largest oil refiner, slumped 4 percent.
The slowdown in China’s domestic consumption and overseas demand has been faster than expected this quarter, Citigroup Inc. analysts wrote in a report dated yesterday, citing feedback from retailers and manufacturers at a Hong Kong conference.
Investors withdrew $1.2 billion from global funds in the week to Dec. 7, the fifth consecutive week of net sales, while money flowed into emerging-market funds for the first time in four weeks, Citigroup analysts wrote in a report today, citing data from fund researcher EPFR Global.
“Investors remained cautious to slightly negative throughout the week on the possible outcome of the EU summit,” Yue Hin Pong, one of the Citigroup analysts, wrote in a separate e-mail.
The extra yield investors demand to own emerging-market debt over U.S. Treasuries fell nine basis points, or 0.09 percentage point, to 405, according to JPMorgan Chase & Co.’s EMBI Global Index.