Emerging-market stocks fell for the first time in three days as a drop in Chinese manufacturing and slumping home sales signaled the economic slowdown is deepening. Russian and Ukrainian shares retreated amid escalating violence.
The Hang Seng China Enterprises Index sank to the lowest since March 25. The Micex Index slid a second day. The Ukrainian Equities Index lost 3.9 percent after the deadliest day since President Viktor Yanukovych was ousted in February. The hryvnia fell 0.4 percent versus the dollar. The lira rose as faster-than-forecast Turkish inflation spurred bets that policy makers won’t cut interest rates too quickly. Brazil’s Ibovespa rose to a five-month high as a poll showed eroding support for President Dilma Rousseff.
The MSCI Emerging Markets Index retreated 0.2 percent to 1,001.01. China’s manufacturing contracted in April for a fourth month, a private survey showed, while new home sales in 54 cities fell 47 percent to the lowest level in four years, according to a Centaline Group report dated yesterday.
“China’s home sales were weak, which is causing some weakness in that sector,” said Hertta Alava, the head of emerging markets at FIM Asset Management Ltd. in Finland, which oversees the equivalent of about $415 million in developing-nation assets. “The hyrvnia could continue to weaken amid the ongoing escalation.”
Nine of 10 industry groups in the developing-nation gauge decreased, led by health-care and energy companies. The premium investors demand to own developing-nation debt over U.S. Treasuries fell three basis points to 293 basis points, according to JPMorgan Chase & Co. indexes.
The Hang Seng China Enterprises Index of mainland companies listed in Hong Kong fell 0.6 percent. PetroChina Co., the country’s biggest oil and gas producer, slid 1.9 percent.
The final reading of the China purchasing managers’ index from HSBC Holdings Plc and Markit Economics Ltd. was 48.1 in April, lower than the preliminary reading of 48.3 and missing the 48.4 projected by economists.
The Shanghai Composite Index added 0.1 percent. Poly Real Estate Group Co. dropped 3.4 percent after Centaline Group said new housing sales tumbled to a four-year low during the May 1-3 holidays.
With Ukraine on an offensive to uproot insurgents from its eastern industrial region, dozens were killed in Odessa on May 2 after Russia sympathizers seeking to escape clashes took refuge in a building later engulfed by fire. Ukraine sought to dislodge pro-Russian rebels as violence threatens to loosen Kiev’s control of the regions.
The UX Index retreated to the lowest level since April 7 and the hryvnia depreciated to 11.6430 per dollar, taking this year’s slump to 30 percent. The Micex declined 0.5 percent to 1,298.29, led by OAO Lukoil, which lost 1 percent.
The yield on Russia’s bonds due in February 2027 fell from a seven-week high, decreasing six basis points to 9.61 percent. The ruble rose 0.3 percent to 35.7349 per dollar.
“The beginning of the week augurs no decrease in geopolitical risks,” Dmitry Polevoy, chief economist for Russia and Commonwealth of Independent States at ING Groep NV, said in an e-mailed note.
South Africa’s rand weakened 0.6 percent versus the dollar after data showed manufacturing unexpectedly contracted in April, while unemployment increased to 25.2 percent last quarter. The Turkish lira strengthened 0.3 percent to 2.1003. The lira posted the longest stretch of gains since April 2010.
Inflation in Turkey quickened to its fastest pace in two years in April. Turkish central bank Governor Erdem Basci last week vowed to keep monetary policy tight until he sees a significant improvement in consumer-price increases.
“This came as a surprise and the market interprets it as the postponement of a possible rate cut by the central bank,” Gokce Celik, an economist at Finansbank AS in Istanbul, said by phone.
The Borsa Istanbul 100 Index decreased for the first time in three days, while equity gauges in Poland, Hungary and Vietnam retreated at least 0.7 percent.
The Ibovespa gained 0.9 percent after a poll showed Rosseff’s lead against potential candidates in Brazil’s October presidential election would be too narrow to call a first-round victory. Power utility Centrais Eletricas Brasileiras SA advanced 2.3 percent, leading gains among state-controlled companies.
Dubai’s DFM General Index climbed 1.6 percent as shares of Dubai Islamic Bank jumped 6.3 percent. The lender is joining regional rivals seeking acquisitions overseas as new capital rules limit opportunities at home.
The MSCI Emerging Markets Index has fallen 0.2 percent this year and trades at 10.5 times projected 12-month earnings. That compares with a multiple of 14.2 for the MSCI World Index of developed-country equities, which is up 1.5 percent in 2014, according to data compiled by Bloomberg.