Emerging Stocks Drop on China Concerns as Brazil Sinks
Emerging-market stocks fell to a one-week low, led by Chinese equities, on concern policy makers will step up efforts to curb real estate prices and inflation. Brazil’s Bovespa Index fell the most in three weeks.
China Resources Land Ltd. (1109) and Zoomlion Heavy Industry Science and Technology Co. slid at least 4 percent in Hong Kong after the Sina.com news portal said the southern city of Shenzhen banned developers from raising new home prices. OGX Petroleo & Gas Participacoes SA, owned by billionaire Eike Batista, slumped to a record low after the company was cut by firms including JPMorgan Chase & Co.
The MSCI Emerging Markets Index slipped 0.8 percent to 1,049.08 in New York. The Shanghai Stock Exchange Property Index retreated 2.5 percent to a three-month low. China should be on “high alert” over inflation after February’s price gains exceeded forecasts, central bank Governor Zhou Xiaochuan said today. Hungarian equities led losses among European stocks as lawmakers backed policies that risk deepening a clash with the European Union.
“The continued news flow that triggered concerns over China’s property tightening are weighing on investors’ sentiment,” Kim Dae Young, a fund manager at KB Asset Management Co., which manages about $28 billion in assets, said by phone from Seoul. “The government seems to be trying to prevent the property market from overheating.”
The iShares MSCI Emerging Markets exchange-traded fund, the ETF tracking developing-nation shares, slipped a third day in New York, losing 0.9 percent to $42.98. The Chicago Board Options Exchange Emerging Markets ETF Volatility Index, a gauge of options prices on the fund and expectations of price swings, rose 5.3 percent to 16.60.
The MSCI Emerging Markets Index has fallen 0.6 percent this year, lagging behind a 6.8 percent gain in the MSCI World Index (MXWO) of developed-country stocks. The emerging-markets measure trades at about 11 times 12-month projected profit, compared with the MSCI World’s 14.1 times, according to data compiled by Bloomberg.
Nine out of 10 groups in the emerging-markets gauge fell as phone and raw material shares had the biggest losses, slumping at least 1.5 percent. Technology companies rose.
The Bovespa Index dropped 1.4 percent as OGX was reduced to the equivalent of sell at Banco Santander SA and Citigroup Inc. and hold at JPMorgan. Mexico’s IPC Index (MEXBOL) slid 1.6 percent to the lowest level since Dec. 14.
Russia’s Micex Index dropped 0.4 percent in a second day of losses. OAO MegaFon (MFON), the nation’s second-largest mobile-phone operator, tumbled as much as 4.8 percent in London, the most since its initial public offering in November.
Hungary’s BUX Index fell 1.1 percent, declining for a third day. The forint gained for the first time in four days after Foreign Minister Janos Martonyi said the government had no intention of weakening the currency.
The Shanghai Composite Index fell 1 percent to a two-month low, its fifth day of declines. The Hang Seng China Enterprises Index (HSCEI) tumbled 2.3 percent. China Resources Land dropped the most since March 4. Zoomlion Heavy, a Chinese construction equipment maker, fell to the lowest since Oct. 8.
India’s S&P BSE Sensex sank 1 percent on speculation faster inflation will limit the extent to which the central bank may ease monetary policy. Infosys Ltd. (INFO), India’s second-largest software exporter, had the biggest drop in three months.
The South Korean won weakened for a fifth day, the longest stretch of declines in 10 months, after a government report showed that the country’s unemployment rate climbed to the highest in a year.
The extra yield investors demand to own emerging-market bonds over U.S. Treasuries declined 1 basis point, or 0.01 percentage point, to 281 basis points, according to JPMorgan Chase & Co’s EMBI Global Index.