Emerging-market stocks slid to the lowest this year and currencies weakened as a deepening rout in Chinese shares and a looming showdown in Greece’s debt talks prompted investors to flee riskier assets in developing nations.
The Shanghai Composite Index sank 1.3 percent amid a record drop in margin bets. Chinese shares traded in Hong Kong entered a bear market as Citic Securities Co. and Haitong Securities Co. plunged more than 13 percent. Benchmarks in the Czech Republic, Hungary and Poland each slumped at least 1.3 percent. A gauge tracking 20 developing-nation currencies against the dollar dropped 0.4 percent to the lowest level since March.
The MSCI Emerging Markets Index slid 1.4 percent to 930.25. Chinese stocks continued to slump as measures to stabilize the market failed to stop a rout that’s erased more than $3.2 trillion in market value. Euro-area finance chiefs on Wednesday will discuss Greece’s latest proposal to stave off a financial collapse after German Chancellor Angela Merkel said “time is running out” to produce a plan for it to stay in the European currency union.
“The lack of visibility on the Greek outlook coupled with the drop in Chinese equities and continued concerns over a possible September Fed rate hike” is weighing on markets, Simon Quijano-Evans, the head of emerging-market research at Commerzbank AG in London, said by e-mail. “The uncertainty will continue until we have more clarity on at least one of the three factors.”
Greek Prime Minister Alexis Tsipras arrived in Brussels in a last-ditch attempt to secure a rescue from European leaders and keep his country in the euro region. The country steered clear of an immediate collision with creditors by promising to put its economic proposals in writing.
The developing-nation gauge has fallen 2.7 percent this year and trades at 11.3 times projected 12-month earnings, data compiled by Bloomberg show. The MSCI World Index has gained 0.9 percent in 2015 and is valued at a multiple of 16.
The Shanghai Composite Index sank for the fourth time in five days. The Hang Seng China Enterprises gauge slumped 3.3 percent, led by Citic Securities Haitong Securities. The stock index slid 20 percent from the May 26 peak to join the Shanghai Composite in entering a bear market.
Traders cut 93.6 billion yuan ($15 billion) of shareholdings bought with borrowed money on the Shanghai exchange Monday, the most since at least 2010.
A flurry of measures to stabilize the market, including a pledge by state-run financial firms to buy 120 billion yuan worth of shares and a halt to initial public offerings, is failing to stop the rout in Chinese stocks. A Bloomberg gauge of the country’s most-traded American depositary receipts plunged the most in four years on Tuesday.
The Ibovespa gained 0.4 percent in Sao Paulo. Brazilian stocks reversed an earlier drop of as much as 2 percent after crude prices rebounded. Petroleo Brasileiro SA, the state-run oil producer, jumped 2.6 percent, ending a two-day decline.
All 10 industry groups in the emerging-markets measure declined Tuesday, led by consumer discretionary companies. The premium investors demand to hold developing-country debt over U.S. Treasuries widened five basis points to 361 basis points, according to JPMorgan Chase & Co. indexes.
The Micex Index slumped 0.4 percent in Moscow. The ruble gained 0.3 percent to 56.739 per the dollar. The currency earlier weakened as much as 1.4 percent as Vladimir Miklashevsky, an analyst at Danske Bank, said in an e-mail that the central bank may continue buying foreign exchange until the it weakens to 60 per dollar as the current level is too strong for the economy.