Most Emerging-Market Stocks Fall on China Worries
Most emerging-market stocks declined as foreign direct investment into China slumped for a fifth month, raising concern weaker growth in the world’s second-largest economy may weigh on riskier assets.
The MSCI Emerging Markets Index was little changed at 1020.08 at the close in New York, erasing an earlier drop of as much as 0.7 percent, as 429 stocks declined and 341 gained. Preferred shares of Samsung Electronics Co. led declines among technology companies. YPF SA (YPFD) plunged 6.9 percent in Buenos Aires as the exchange lifted a trading halt imposed yesterday after the government said it would seize the oil company.
Foreign direct investment into China fell 6.1 percent from a year earlier to $11.76 billion. The country’s economy expanded the least in almost three years in the first quarter. The gauge pared losses after the International Monetary Fund increased its outlook for global growth this year to 3.5 percent from 3.3 percent and boosted its forecast for U.S. expansion to 2.1 percent from 1.8 percent.
“We have seen a structural decline in the growth rate in China,” Clive McDonnell, head of emerging-market equity strategy for Standard Chartered Plc., said in an interview with Tom Keene on Bloomberg TV. For emerging-market assets, “the optimism that was in place there during the first quarter has ebbed.”
The MSCI Emerging Markets Index (MXEF) has risen 11 percent this year, compared with an 8.8 percent gain in the MSCI World Index of developed nations. Shares in the developing nation gauge are trading at 10.4 times estimated earnings, cheaper than the 12.5 multiple of the developed-nation counterpart.
The IShares MSCI Emerging Markets Index exchange-traded fund, the most-traded ETF to track developing-nation shares, rose 1.2 percent to $42.43 in New York. 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 5 percent to 27.24.
Brazil’s Bovespa (IBOV) jumped 1.2 percent, ending a two-day slide. Gol Linhas Aereas Inteligentes SA (GOLL4) gained 11 percent after newspaper Valor Economico reported the government may cut the payroll and aircraft fuel taxes to boost airline competitiveness.
Localiza Rent a Car SA gained 5 percent, the most in more than a month, after saying first-quarter net income rose 14 percent, beating the average estimate of seven analysts in a Bloomberg survey.
YPF lost closed at the lowest in three years, leading the benchmark Merval index to a third day of losses. Argentina’s government sent a bill to Congress yesterday to seize 51 percent of YPF from Spain’s Repsol YPF SA and took over management of the company.
Turkey’s ISE National 100 Index (XU100) added 0.3 percent, the first rise in three days. Turk Telekomunikasyon AS (TTKOM) gained the most in a month after reporting a 27 percent increase in first- quarter profit. It was the first of Turkey’s largest companies to report earnings for the quarter.
Russia’s Micex fell 0.4 percent, a second day of losses. OAO Mechel (MTLR) shares slid 4.1 percent, their sharpest drop in two weeks, after Russia’s Natural Resources Ministry said a unit committed breaches serious enough to warrant canceling some licenses.
Foreign direct investment in China fell to $11.76 billion in March, the nation’s Ministry of Commerce said today, after a 0.9 percent decline the previous month. The Hang Seng China Enterprises Index (HSCEI) of mainland companies in Hong Kong lost 0.5 percent. China Construction Bank Corp. (939) slid 2 percent in Hong Kong.
Samsung’s preferred shares fell 3.9 percent. South Korea’s Kospi index lost 0.4 percent.
The BSE India Sensitive Index (SENSEX), or Sensex, rose 1.2 percent after the nation’s central bank cut its benchmark interest rate for the first time since 2009 by a larger-than-expected 0.5 percentage point to bolster economic growth. State Bank of India, the nation’s biggest lender, added 1.7 percent.
The extra yield investors demand to own emerging-market debt over U.S. Treasuries declined six basis points, or 0.06 percentage point, to 357, according to JPMorgan Chase & Co.’s EMBI Global Index.