Emerging Stocks Fall on Commodity Plunge as Brazil Slumps
Emerging stocks fell to a four- month low, led by energy companies, as declining commodities prices dragged down equities from Brazil to Russia.
OAO Gazprom, Russia’s biggest natural-gas producer, slid to the lowest level since March 2009. Brazil’s Bovespa index slumped the most among major benchmarks in developing countries as OGX Petroleo & Gas Participacoes SA, the oil producer of Brazilian billionaire Eike Batista, dropped 11 percent. KGHM (KGH) Polska Miedz SA tumbled 7.3 percent in Warsaw as copper retreated, driving Poland’s WIG20 Index (WIG20) to a seven-month low.
The MSCI Emerging Markets Index (MXEF) dropped 0.8 percent to 1,001.10 in New York. Copper plunged the most in 16 months as the International Monetary Fund cut its forecast for China’s gross domestic product growth yesterday, while crude oil tumbled to a four-month low. The rand weakened 0.7 percent versus the dollar and South African bonds gained, as March inflation was slower than predicted by economists.
“Commodities have been in a downtrend for a while, and that accelerated with the GDP out of China,” Walter Todd, who oversees about $940 million as chief investment officer of Greenwood Capital Associates LLC in Greenwood, South Carolina, said in a telephone interview. The IMF cutting forecasts “certainly doesn’t help.”
Gauges of energy and material stocks in the MSCI Emerging Markets Index fell the most among 10 industry groups. The emerging-markets index slipped 5.1 percent this year, trailing a 6.1 percent increase in the MSCI World Index of developed- country stocks. The emerging-markets measure trades at 10.4 times 12-month projected profit, compared with the MSCI World’s 13.7, data compiled by Bloomberg show.
The iShares MSCI Emerging Markets Index exchange-traded fund lost 1.6 percent to $41.04. The Chicago Board Options Exchange Emerging Markets ETF Volatility Index, a measure of options prices on the fund and expectations of price swings, jumped 12 percent to 22.46.
The Bovespa Index slumped 2.1 percent in Sao Paulo as OGX plunged after saying its output in offshore wells dropped 26 percent in March. LLX Logistica SA and MMX Mineracao & Metalicos SA, also controlled by Batista, slumped at least 9.5 percent today. Mexico’s IPC index dropped 1.4 percent.
Russia’s Micex index fell 1.2 percent, retreating for a fifth day, the longest losing streak in two months. Gazprom sank 1.9 percent. Poland’s WIG20 Index dropped 1.9 percent. KGHM, the country’s sole copper and silver producer, fell as copper lost 3 percent.
Most Chinese stocks rose as Hisense Electric Co. led appliance stocks higher amid a jump in profit. Banks declined on concern lending will slow. China Minsheng Banking Corp. slid 2.8 percent as the China Securities Journal said new lending may drop to 800 billion yuan ($129.4 billion) this month.
India’s (SENSEX) benchmark stock index fell for the first time this week amid concern company earnings will trail analysts’ estimates. Reliance Industries Ltd. (RIL), the second-biggest stock on the 30-stock gauge by weighting, retreated the most in six months after quarterly sales lagged behind forecasts.
The won fell from a two-week high as a worsening outlook for the currency spurred sales of South Korea’s shares by global funds. Government bonds also declined.
The extra yield investors demand to own emerging-market debt over U.S. Treasuries was unchanged at 295 basis points, according to JPMorgan Chase & Co.’s EMBI Global Index.