Emerging Stocks Pare Weekly Advance as Infosys Plunges
Developing-nation stocks slid for the first time in four days, led by India, as commodities declined on concern the global outlook is deteriorating and Infosys Ltd. (INFO) forecast lower-than-estimated sales.
Infosys, India’s second-largest software services exporter, dropped the most in a decade in Mumbai and New York after saying revenue will expand at a rate around 50 percent below the pace projected by analysts. The S&P BSE India Index sank the most since February. Technology stocks led declines on the MSCI Emerging Markets Index. (MXEF) Brazil’s Bovespa index pared a slump of as much as 1.7 percent as Vale SA rallied.
The gauge of developing-country stocks dropped 0.9 percent to 1,019.61 in New York, trimming a weekly advance to 1.1 percent. The S&P GSCI Spot Index of commodities retreated 1.3 percent after the International Energy Agency cut its estimates for global oil demand. Crude sank 2.4 percent in New York as U.S. retail sales unexpectedly fell in March by the most in nine months and a gauge of consumer sentiment slipped.
“Globally, there are too many ifs and buts and there’s hardly anything that seems certain,” Neelakantan Sethuram Iyer, chief investment officer at Daiwa Asset Management India Pvt., said from Mumbai. “There could be some hiccups in earnings.”
Nine out of 10 groups in the MSCI Emerging Markets Index fell as technology shares dropped 2 percent. The emerging- markets gauge slipped 3.4 percent this year, trailing an 8.8 percent increase in the MSCI World Index (MXWO) of developed-country stocks. The emerging-markets measure trades at 10.6 times 12- month projected profit, compared with the MSCI World’s multiple of 14.1, according to data compiled by Bloomberg.
The iShares MSCI Emerging Markets Index exchange-traded fund declined 1.5 percent to $41.88. The Chicago Board Options Exchange Emerging Markets ETF Volatility Index, a measure of options prices on the fund and expectations of price swings, surged 4 percent to 17.92.
Brazil’s Bovespa trimmed its loss to 0.8 percent after Mines and Energy Minister Edison Lobao said the nation’s mining companies probably will avoid a special participation tax. Vale rallied 1.6 percent.
Mexican homebuilder Corp. Geo SAB plunged 8.8 percent to the lowest level since July 2003 as the company said it will seek to restructure its debt amid waning cash flows. The benchmark IPC Index fell 0.9 percent in Mexico City.
The Micex Index slid 1.1 percent to the lowest level since November. Russian growth is forecast to slow to 2.4 percent this year on high interest rates and lower gas exports, Economy Minister Andrei Belousov told reporters today. OAO Mechel (MTLR), a coking coal and steel producer, tumbled 6.3 percent.
“Growth forecasts have come down,” Alan Gayle, senior strategist at RidgeWorth Capital Management, said by phone from Atlanta. His firm oversees about $48 billion. “Softer U.S. consumer news and building concern in North Korea are weighing on emerging markets.”
Indian stocks tumbled the most in more than a month, with the benchmark index completing a second week of declines. Infosys plunged 21 percent for the biggest loss in the MSCI Emerging Markets Index.
Korea’s Kospi index fell 1.3 percent as foreign investors sold equities on concern profit of builders and shipyards will slump and North Korea tensions may increase. GS Engineering & Construction Corp. (006360), which reported an unexpected loss this week, tumbled by the daily limit for a second day.
The Shanghai Composite Index dropped 0.6 percent to the lowest level since Dec. 27. The Hang Seng China Enterprises Index slipped 0.5 percent. Gree Electric Appliances Inc. and SAIC Motor Corp., the largest Chinese makers of air-conditioners and autos, slumped. Sihuan Pharmaceutical Holdings Group Ltd. jumped 6 percent in Hong Kong.
The extra yield investors demand to own emerging-market debt over U.S. Treasuries rose three basis points, or 0.03 percentage points, to 284 basis points, according to JPMorgan Chase & Co.’s EMBI Global Index.
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