Emerging-market stocks fell for a second day on concern ratings cuts for European nations will worsen the region’s debt crisis and before the release of economic data that may show a decline in China’s growth rate.
The MSCI Emerging Markets Index declined 0.1 percent to 951.83 at the close in New York. The Shanghai Composite Index dropped the most in a month before the release of gross domestic product figures that may show China’s economy grew at the slowest pace in 10 quarters. Brazil’s Bovespa Index gained 1.4 percent after a report showed the economy expanded more than forecast. South Korean stocks fell 0.9 percent and Taiwan’s benchmark slid 1.1 percent.
Europe’s bailout fund lost its top credit rating today at Standard & Poor’s, following downgrades Friday for France and eight other European nations on concern the region hasn’t done enough to contain its debt crisis. China’s economy may have grown 8.7 percent in the last quarter of 2011, the slowest pace since the second quarter of 2009, according to the median of 26 estimates in a Bloomberg survey.
“After the wave of rating downgrades that affected the euro-zone, global markets are likely to show signs of increased tensions in the near term, with negative repercussions for emerging markets assets,” Societe Generale SA analysts led by Benoit Anne wrote in an e-mailed note today. Discussions on private-sector involvement in a Greek debt swap, “represent a major source of risk for global markets, especially after the latest indications that the negotiations with the private sector creditors may fail.”
The Greek government and its creditors will return to the negotiating table this week to revive stalled talks on the debt swap. The two sides broke off negotiations Jan. 13 and haven’t reached a deal on the coupon or maturity of the bonds investors will receive in the exchange.
Emerging-market stocks have gained 3.9 percent this year, compared with a 1.7 percent increase for the MSCI World Index of developed-nation shares. Developing-country stocks trade for 9.7 times projected earnings, below the 11.7 times multiple for developed-nation equities.
Brazil’s seasonally adjusted economic activity rose 1.15 percent in November from October, the central bank said in a report today. That exceeded the median forecast of 21 analysts surveyed by Bloomberg, who projected a 0.9 percent gain.
OGX Petroleo & Gas Participacoes SA, the oil company controlled by Brazilian billionaire Eike Batista, gained 5.8 percent, the most on the Bovespa. OGX found hydrocarbons in a well in Brazil’s Santos Basin, according to a regulatory filing today.
The Shanghai Composite Index slid 1.7 percent, the fourth straight daily decline.
The benchmark ISE National 100 Index rose 2.4 percent in Istanbul, the most since Jan. 3.
The FTSE/JSE Africa All Share Index advanced 0.8 percent in Johannesburg as gold and copper prices rose.
The extra yield investors demand to own emerging-market debt over U.S. Treasuries rose eight basis points on Jan. 13 to 441, according to JPMorgan Chase & Co.’s EMBI Global Index. U.S. markets were closed today for a holiday.