Emerging-market stocks fell to a seven-week low as speculation that the U.S. is close to raising interest rates spurred capital outflows.
South Korean equities tumbled the most since January, led by Samsung Electronics Co. Brazilian lenders led a 1.1 percent gain in the Ibovespa as concern eased that President Dilma Rousseff will face obstacles in implementing measures to close Brazil’s budget deficit. South Africa’s benchmark slumped for a seventh day. Russia’s ruble weakened to a five-week low versus the dollar as a Bloomberg gauge tracking 20 emerging-market currencies fell for an eighth straight day.
The MSCI Emerging Markets Index dropped 0.7 percent to 1,019.09, declining for a third day as nine of 10 industry groups fell. Better-than-expected U.S. capital-equipment orders, new-home sales and regional manufacturing Tuesday bolstered prospects for a tighter monetary policy, with the Federal Reserve emphasizing that any rate increases will be driven by data.
“Concerns about U.S. monetary policy have resurfaced,” Koon Chow, a Union Bancaire Privee currency strategist in London, said by phone. “Emerging markets follow U.S. rates as they’re a key knock-on for valuations. The concerns are overdone, though, as we’ve been discussing tightening for a long time.”
The developing-nation index has gained 6.6 percent this year and trades at 12.1 times projected 12-month earnings, data compiled by Bloomberg show. The MSCI World Index of advanced-nation equities has risen 4.9 percent in 2015 and is valued at a multiple of 16.8.
Swiss authorities, acting at the behest of the U.S. Department of Justice, arrested officials of the soccer governing body FIFA as part of a criminal probe into the controversial 2010 vote that delivered the next two World Cups to Russia and Qatar.
Russia’s dollar-denominated RTS Index declined 1.3 percent, extending its three-day retreat to 3.7 percent. The ruble slid 2 percent to 51.989 per dollar.
Itau Unibanco Holding SA rose 2 percent, leading gains in Sao Paulo. The real strengthened 0.3 percent, ending a four-day decline against the dollar as Brazil’s Senate approved a reduction in unemployment benefits, easing concern that the government will struggle to close the largest budget gap in 16 years.
Stocks in Doha retreated 1.5 percent, the most since April 1. Qatar’s $200 billion plan for the 2022 event has come scrutiny after the U.S. indicted nine FIFA officials on racketeering and corruption charges.
South Korea’s Kospi Index tumbled 1.7 percent as HSBC Holdings Plc cut its economic growth forecast. Concern a U.S. interest-rate increase is imminent spurred foreign investors to sell about 231 billion won ($209 million) more Kospi-listed shares than they bought on Wednesday. Samsung dropped 3.5 percent to the lowest price in four months.
The won weakened 0.4 percent as a plunge in the yen fueled concern that the Bank of Korea will intervene to protect the nation’s exporters.
The FTSE/JSE Africa All Shares Index dropped 0.1 percent, its seventh day of losses, the longest streak since February 2014.
Chinese stocks rose for a seventh day, with the Shanghai Composite Index approaching the 5,000 level for the first time since 2008 on gains for commodity and power producers.
The premium investors demand to own emerging-market debt over U.S. Treasuries increased two basis points to 338 basis points, according to JPMorgan Chase & Co. indexes.