Emerging-market stocks fell for a second day, led by utility and consumer discretionary companies, amid concern corporate earnings will falter. India’s benchmark index slumped after briefly surpassing its record closing high.
The MSCI Emerging Markets Index declined 0.3 percent to 1,030.82, extending a two-day drop to 1.3 percent. Brazilian cosmetics maker Natura Cosmeticos SA tumbled to an eight-week low after profit trailed estimates, while OAO Pharmstandard slid in Moscow as sales fell. India’s S&P BSE Sensex erased a gain that drove it above an all-time closing high of November 2010. The Shanghai Composite Index sank as policy makers drained cash from the financial system amid signs of a pickup in the economy.
More than half of the 76 companies that reported quarterly earnings in the benchmark gauge for developing nations missed analysts’ sales estimates, according to data compiled by Bloomberg. China’s benchmark money-market rate rose the most since June as policy makers are withdrawing liquidity after a recovery in the world’s second-largest economy fuels the biggest jump in home prices since at least January 2011.
“The early stages, both in terms of earnings and some of the macro factors that have been driving emerging markets, leave more uncertainty than we would like to see,” Bruce McCain, who helps oversee more than $20 billion as chief investment strategist at the private-banking unit of KeyCorp in Cleveland said by phone. That “doesn’t bode well for continuing the momentum for the emerging markets.”
Seven out of 10 groups in the MSCI Emerging Markets Index fell. The gauge for developing nations has dropped 2.3 percent this year to trade at 10.7 times projected earnings, compared with the valuation of 14.3 for the MSCI World Index.
The iShares MSCI Emerging Markets Index exchange-traded fund retreated 0.2 percent to $42.55. The Chicago Board Options Exchange Emerging Markets ETF Volatility Index, a measure of options prices on the fund and expectations of price swings, retreated 0.4 percent to 21.50.
Brazil’s Ibovespa dropped for a second day as Natura declined 3.8 percent. Brookfield Incorporacoes SA sank to the lowest since July after a report showed Brazil’s unemployment rate was higher than economists had forecast, dimming the outlook for homebuilders.
Russian stocks dropped to a two-week low as oil, the country’s main export earner, retreated and Pharmstandard slumped for a fourth consecutive day. Benchmark gauges in Poland, Hungary and Turkey advanced.
India’s Sensex erased a rally of as much as 1.3 percent as Wipro Ltd. led a gauge of technology shares to its lowest level in two weeks. Coal India Ltd., the world’s top producer of the fuel, declined to a six-week low.
The Shanghai Composite Index declined to a one-month low. Money rates jumped after the People’s Bank of China refrained from conducting reverse repos for a third straight auction. The PBOC drained a net 58 billion yuan ($9.5 billion) from the financial system this week as reverse repos matured, said Chen Long, an analyst at Bank of Dongguan.
The premium investors demand to own emerging-market debt over U.S. Treasuries fell two basis points, or 0.02 percentage point, to 310 basis points, according to JPMorgan Chase & Co.