Emerging Stocks Slip Third Day as China Homes Drop Curbs Outlook
Emerging-market stocks slid for a third day, led by property developer Poly (Hong Kong) Investments Ltd., as the worst month for Chinese home prices since at least 2011 bolstered global slowdown concerns.
The MSCI Emerging Markets Index (MXEF) slid 0.2 percent to 1,061.31 at the close in New York, as energy producers and telecommunications companies dropped.
Moscow-based OAO Gazprom (GAZP), the world’s biggest gas producer, slumped to a one-month low as Russia’s Micex Index (INDEXCF) had the largest decline in almost two weeks. Industrial & Commercial Bank of China Ltd., the world’s biggest lender by market value, fell 1.5 percent, as lenders and developers led the Hang Seng China Enterprises Index (HSCEI) lower for the fourth day. Brazil’s Bovespa Index (IBOV) advanced for the first time in four days.
New home prices in China fell in 27 of 70 cities in February from a year earlier and prices were unchanged in six, government data showed yesterday, the worst performance since officials began releasing data for individual cities at the start of 2011. Christine Lagarde, the International Monetary Fund’s managing director, also warned of slowing growth in emerging markets in a March 18 speech in Beijing.
“The government’s been trying to get house prices down, and clearly from that data point they’ve been successful,” Tim Hall, who manages $700 million at Deltec Asset Management in New York, said by phone. “If the policy makers deem that prices have stabilized enough or have come down enough, they might either curb those restrictive policies or they might implement policies that are more stimulative to the housing sector.”
EM ETF Slips
The three-day decline in MSCI’s emerging-market benchmark has pared the gauge’s advance this year to 16 percent, while developed-market stocks have gained 12 percent. The emerging- market measure trades for 10.8 times estimated earnings, cheaper than the 13.3 ratio for developed-market stocks listed on the MSCI World Index. The valuation gap is the largest since February 2009.
The iShares MSCI Emerging Markets Index exchange-traded fund, the most-traded ETF that tracks developing-nation shares, fell 0.4 percent in New York to $43.92, dropping for a second day.
The Chicago Board Options Exchange Emerging Markets ETF Volatility Index (VXEEM), a gauge of options prices on the fund and expectations of price swings, fell 0.3 percent to 23.92, declining for a third day.
Poly Investments (119), based in Hong Kong, tumbled 7.9 percent in the city in the biggest one-day drop since November.
Gazprom fell 3.2 percent in Moscow to the lowest close since Feb. 22. Preferred shares of OAO Transneft (TRNFP), Russia’s oil pipeline monopoly operator, lost 2.1 percent, while the 30-stock Micex slipped 2 percent.
Aluminum Corp of China Ltd. fell 4.2 percent to a six-week low in Hong Kong after saying it may be unprofitable in the first quarter following a second-half net loss of 174.6 million yuan ($28 million), according to Bloomberg calculations based on the company’s full-year earnings announced last week. The Hang Seng China Enterprises Index’s four-day losing streak is the longest this year.
The Bovespa rose 0.1 percent in Sao Paulo, its first advance since March 13. Brasil Insurance Participacoes e Administracao SA gained 2.3 percent to the highest since March 1, after Banco BTG Pactual SA said the company is its top pick in Brazil’s insurance industry and recommended that clients buy the stock.
Markets in Mexico, Colombia and Venezuela are closed today for holidays.
The WIG20 Index (WIG20) slid 0.6 percent in Warsaw. Industrial output growth in Poland slowed to a 4.6 percent annual pace in February, lagging behind the 8.8 percent median estimate in a Bloomberg survey of 24 economists.
The BSE India Sensitive Index, or Sensex (SENSEX), slipped 1.1 percent as rising oil prices spurred concern that the government will find it difficult to curb the budget deficit. State Bank of India, the nation’s largest lender, dropped 3.2 percent.
Taiwan Semiconductor Manufacturing Co. (2330), the world’s largest contract maker of chips, advanced 3.2 percent in Taipei after saying that it may raise capital spending and as Morgan Stanley said the stock is on the bank’s preferred list.
Morgan Stanley upgraded semiconductor stocks in Asia and emerging markets to overweight, meaning investors should hold a greater proportion of the stock than the benchmark indexes, according to a report today.
The extra yield investors demand to own emerging-market debt over U.S. Treasuries narrowed seven basis points, or 0.07 percentage point, to 314 basis points, according to JPMorgan Chase & Co.’s EMBI Global Index.