Emerging-market stocks dropped the most in almost seven months amid concern a slowdown in the Chinese economy will curb global growth. Russia’s ruble breached the upper boundary of Bank Rossii’s target corridor.
The MSCI Emerging Markets Index fell 1.9 percent to 931.64, capping the biggest retreat since July 3. Benchmark equity gauges from China to India and South Africa decreased at least 1 percent. The ruble sank to lowest level on a closing basis since 2009 against its dollar-euro basket. Turkey’s lira snapped a 10-day slide on speculation the central bank will raise interest rates at a surprise policy meeting tomorrow.
Stocks in developing nations drove losses in global equities amid signs growth is slowing in China, the world’s second-biggest economy. Factory output may shrink this month, a preliminary survey from HSBC Holdings Plc and Markit Economics indicated last week, as the People’s Bank of China injected funds into the financial system to ease a cash shortage. Investors also watched U.S. economic data as the Federal Reserve prepares to review further stimulus cuts at a meeting this week.
“The sluggish growth we see in China underscores the general concern that the economy is a lot weaker than it seemed,” Bruce McCain, who helps oversee more than $25 billion as chief investment strategist at the private-banking unit of KeyCorp in Cleveland, said in a telephone interview. “If you look at economic data from China, you see that there are few chances things are going to get better, more likely things are going to get worse.”
All 10 groups in the emerging-market gauge fell, led by utility and technology companies. The iShares MSCI Emerging Markets Index exchange-traded fund decreased 0.4 percent to $38.09. The Chicago Board Options Exchange Emerging Markets ETF Volatility Index, a measure of options prices on the fund and expectations of price swings, climbed 4.1 percent to 29.43.
Brazil’s Ibovespa fell for a third day as brewer AmBev SA led a decline in consumer stocks after economists lowered their growth forecast for Latin America’s biggest economy. The MSCI Brazil/Consumer Staples Index sank to the lowest since November 2011. Online retailer B2W Cia. Digital surged the most on record after saying it would sell new shares to its controlling shareholder and a U.S. investment firm. The real slid to the weakest level since Aug. 22.
Russian equities fell the most in three weeks as the ruble’s retreat pushed down shares in OAO Sberbank, the nation’s biggest lender. Goldman Sachs Group Inc. said investors are testing the regulator’s pledge to let the currency trade freely by 2015.
The lira erased losses after Turkey’s central bank said it will “take the necessary policy measures for price stability” at a meeting tomorrow, fueling speculation that it could do everything from raise interest rates by three percentage points to impose capital controls. A decision by policy makers last week to keep rates on hold was partly responsible for the currency’s biggest weekly selloff in almost four years.
The FTSE/JSE Africa All Shares Index retreated 1.5 percent in Johannesburg as media company Naspers Ltd. tumbled 5.1 percent. The rand weakened for a fourth day.
Chinese stocks fell, with a gauge of mainland companies traded in Hong Kong sliding to a five-month low, amid concern an economic slowdown will hurt earnings. China Coal Energy Co., the nation’s second-largest coal producer, dropped 2 percent in Hong Kong after saying 2013 profit probably declined as much as 65 percent. Gains in all eight companies trading for the first time today in Shenzhen triggered halts in their shares.
India’s S&P BSE Sensex posted its biggest decline in almost five months. Tata Motors Ltd., the nation’s top automaker by revenue, plunged the most in a year after Managing Director Karl Slym died in Bangkok. ICICI Bank Ltd. fell the most in four months. Ranbaxy Laboratories Ltd. slumped to its lowest since August. The rupee weakened to a two-month low.
Indonesia’s stocks and government bonds led losses in Southeast Asia and the rupiah dropped on concern the nation’s current-account deficit makes it vulnerable to capital outflows caused by further cuts to U.S. stimulus. Malaysia’s ringgit dropped to the weakest level since May 2010.
The premium investors demand to own emerging-market debt over U.S. Treasuries fell four basis points, or 0.04 percentage point, to 340 basis points, according to JPMorgan Chase & Co.