Emerging stocks fell, trimming a weekly advance, as Indian shares plunged the most among global indexes and a trading error roiled Chinese markets. Brazil’s real posted the biggest decline in almost 15 months.
The MSCI Emerging Markets Index slid 0.3 percent to 958.11. India’s S&P BSE Sensex Index dropped the most among 94 world gauges as the rupee slid to a record. The Shanghai Composite Index posted the biggest swings since 2009. The real capped the worst performance among all currencies tracked by Bloomberg as Finance Minister Guido Mantega said the slump was good for the local industry. Egypt’s bonds capped the steepest three-day drop in 14 months after a deadly government crackdown.
A trading error at Everbright Securities Co. drove Chinese shares to the biggest swings since the global financial crisis, threatening to erode confidence in the second-worst performing stock market after Greece during the past four years. Indian stocks plunged amid concern that government efforts to stem the rupee’s slide to a record low will curb economic growth.
“These events like you’re seeing aren’t doing anything to instill any kind of confidence towards why they feel the need to go into emerging market equities,” Mark Luschini, the chief investment strategist of Janney Montgomery Scott, which oversees about $58 billion of assets. “You don’t need to be a hero by delving into markets that aren’t behaving well,’
The slide in the MSCI Emerging Markets Index was led by financial and utility companies and trimmed a weekly gain to 0.7 percent. The broad measure dropped 9.2 percent this year, compared with a 13 percent surge in the MSCI World Index. The gauge of developing nations is trading at 10.1 times estimated earnings, below the valuation of developed markets of 13.7.
The iShares MSCI Emerging Markets Index exchange-traded fund slid 0.9 percent at $39.30. The Chicago Board Options Exchange Emerging Markets ETF Volatility Index, a measure of options prices on the fund and expectations of price swings, rose 2.3 percent to 23.62.
India’s S&P BSE Sensex Index dropped 4 percent in Mumbai as State Bank of India tumbled to the lowest level in four years. ICICI Bank Ltd. slumped 5.2 percent. The rupee touched an unprecedented 62.0050 per dollar today before closing 0.3 percent weaker from Aug. 14 at 61.6550 in Mumbai, according to prices from local banks compiled by Bloomberg.
The Shanghai gauge jumped from a loss of as much as 1 percent to a gain of 5.6 percent in two minutes during the morning session as 16 of the measure’s 20 biggest companies by weighting rose by the 10 percent daily limit. The index fell 0.6 percent at the close. About 15.3 billion shares of Shanghai Composite companies changed hands, versus the 30-day average of 10 billion, data compiled by Bloomberg show.
Brazil’s real dropped 2.2 percent, the most in 15 months. The Ibovespa posted a second weekly gain as pulp producer Fibria Celulose SA led commodity producers higher amid bets that a pickup in global growth will boost Brazil’s exports.
Egypt’s 5.75 percent dollar-denominated notes maturing April 2020 fell 4.3 percent in the past three days, according to data compiled by Bloomberg. That’s the most since the period ended June 22, 2012, the final trading day before Mohamed Mursi, who was ousted by the military last month, was declared Egypt’s first democratically elected president.
The Micex Index lost 0.8 percent in Moscow as state-run power company OAO RusHydro fell 1.8 percent after sliding 3.6 percent yesterday. Benchmark gauges in the Czech Repubic, Hungary and Turkey added at least 0.4 percent, while stocks in Poland retreated.
The premium investors demand to own emerging-market debt over U.S. Treasuries slid 0.05 percentage point to 319 basis points, according to JPMorgan Chase & Co.