Emerging-market stocks fell the most in two months as data signaling contractions in Chinese and European manufacturing as well as an increase in jobless claims in the U.S. eroded confidence in the global economy.
The MSCI Emerging Markets Index lost 1.1 percent to 998.27 in New York, the steepest slide since July 23. Mexico’s IPC Index retreated the most in three weeks, with Grupo Aeroportuario del Pacifico SAB posting the biggest decline in four months. The Shanghai Composite Index tumbled 2.1 percent to the lowest level since February 2009. OAO Mechel, the Russian coal producer, sank 3.8 percent in its fourth day of losses.
China’s manufacturing may shrink in September for an 11th month, according to preliminary data for a purchasing managers’ index released by Markit Economics. A gauge of euro-area manufacturing and services output fell to a 39-month low and trailed the median estimate of economists surveyed by Bloomberg. Japan’s exports dropped for a third month in August, the government said today and jobless claims in the U.S. rose more than forecast.
“The reality is we are living in a very pressured global economy,” Aryam Vazquez, an economist for global emerging markets at Wells Fargo & Co., said by phone from New York. “The market got ahead of itself in its optimism over the flush global liquidity conditions. Growth continues to disappoint, particularly in China and the EU, and that is the fundamental driver of global risk perception.”
The iShares MSCI Emerging Markets Index exchange-traded fund, the ETF tracking developing-nation shares, dropped 0.6 percent. The Chicago Board Options Exchange Emerging Markets ETF Volatility Index, a measure of options prices on the fund and expectations of price swings, declined 3.7 percent.
Mexico’s IPC Index lost 1.1 percent as Aeroportuario del Pacifico tumbled 3 percent. Brazil’s Bovespa index rose for the first time in four days, gaining 0.1 percent, after a report showed unemployment unexpectedly dropped last month.
The index of U.S. leading economic indicators fell 0.1 percent in August, led by a decline in new orders for manufacturing. The U.S. Labor Department reported jobless claims reached 382,000 last week, which was more than the 375,000 forecast by economists polled by Bloomberg.
“I think all these numbers add to the climate of low growth,” Vazquez said. “Nothing is being done to address these structural issues. What we continue to see are mere liquidity fixes.”
The BSE India Sensitive Index fell 0.8 percent and the rupee weakened after Prime Minister Manmohan Singh’s largest coalition partner said it will quit the government over policy changes announced last week.
Russia’s Micex Index was little changed. Equity gauges in Malaysia and the Czech Republic declined more than 1 percent. All 10 industry groups in the MSCI emerging markets index retreated, led by material companies.
The developing-nations measure has climbed 8.9 percent this year, trailing a 13 percent increase by the MSCI World Index. The emerging-markets index trades at 11.2 times estimated earnings, compared with the MSCI World’s multiple of 13.4, according to data compiled by Bloomberg.
The extra yield investors demand to own emerging-market dollar bonds over U.S. Treasuries rose three basis points, or 0.03 percentage point, to 294, according to JPMorgan’s EMBI Global Index. Cnooc Ltd., China’s largest offshore energy explorer, fell 3.5 percent, the most since July 24. Jiangxi Copper Co., China’s biggest producer of the metal, lost 3.1 percent. Copper sank 1.4 percent in New York.
The preliminary manufacturing reading for China, the world’s largest user of copper and the biggest emerging economy, was 47.8, compared with August’s final reading of 47.6. A number below 50 separates expansion and contraction.
If confirmed, it will indicate the longest streak of contraction in the survey’s eight-year history. Imports in Japan slid 5.4 percent, leaving a trade deficit of 754.1 billion yen ($9.6 billion), according to the Finance Ministry.
The slowdown coincides with rising tensions between China and Japan over disputed islands, which threatens a trade relationship of more than $340 billion. Japanese automobile sales in China will be hurt as the tensions deter consumers, according to the Japan Automobile Manufacturers Association.
Motech Industries Inc., a Taiwanese solar cell maker, slid 6.4 percent, the biggest drop in the MSCI emerging market index, after solar panel prices and oil sank. Neo Solar Power Corp. tumbled 5.4 percent and Green Energy Technology Inc. slumped 5.9 percent in Taipei.