Emerging Stocks Fall the Most in Three Weeks
Emerging stocks fell, trimming the longest weekly rally since January, as the yen’s tumble to a four-year low dimmed the outlook for global exporters. South Korea’s won led a selloff in developing-nation currencies.
Samsung Electronics Co. (005930), the largest maker of mobile phones, sank 2.6 percent in Seoul, while Hyundai Motor Co. (005380) slid the most since April 19. Russian stocks dropped for the first day this week, led by power producers OAO RusHydro and OAO Inter RAO UES, as crude oil tumbled. Brazil’s Ibovespa fell a third day as B2W Cia. Digital paced losses in consumer stocks. The won weakened 1.4 percent in the biggest slump in three months.
The MSCI Emerging Market Index lost 0.9 percent to 1,050.74, paring its third weekly rally. The gauge rose 0.8 percent in five days. The yen fell beyond 101 per dollar for the first time since April 2009, helping Japan’s exporters compete at the expense of global rivals. All 24 developing-nation currencies tracked by Bloomberg declined against the U.S. dollar and the S&P GSCI Index of commodities slid 0.9 percent.
“The dollar gets stronger and it negatively impacts emerging economies, many of which are sensitive to export flows,” Peter Sorrentino, who helps manage about $14.7 billion at Huntington Asset Advisors in Cincinnati, said in a phone interview. “You get a pricing impact on the currency translation for the markets themselves, but it also dims the prospects for a lot of those economies that are export driven.”
Technology and commodity shares led losses among the 10 groups in the emerging-market gauge. The broader measure has fallen 0.4 percent this year, after erasing its 2013 decline earlier this week. That compares with a 12 percent increase in the MSCI World Index of developed-country stocks.
The iShares MSCI Emerging Markets exchange-traded fund slid 0.8 percent to $43.57. The Chicago Board Options Exchange Emerging Markets ETF Volatility Index, a measure of options prices on the fund and expectations of price swings, added 5.7 percent to 19.59 in a third day of gains.
Brazil’s Ibovespa (IBOV) dropped 0.6 percent on concern that a weaker Brazilian real will fuel inflation. B2W sank 7.7 percent, while OGX Petroleo e Gas Participacoes SA fell after the oil producer’s net loss was wider than forecast.
The Micex Index (INDEXCF) declined 0.5 percent in Moscow, resuming trading after a holiday yesterday. RusHydro and Inter RAO dropped at least 2.7 percent. West Texas Intermediate crude fell a second day as the strengthening dollar cut the appeal of raw materials priced in the U.S. currency.
Benchmark gauges in Poland, Turkey and Hungary lost at least 0.1 percent. Eurocash SA, a distributor of non-durable consumer goods, tumbled 7.8 percent in Warsaw as earnings missed estimates. OTP Bank Nyrt., Hungary’s largest lender, fell from the highest in almost three months as Economy Minister Mihaly Varga said he may raise taxes on banking transactions.
South Korean stocks fell the most in nine months, led by exporters, after the won climbed to its highest level against the yen in more than four years. Samsung Electronics retreated the most since March 15, while Hyundai Motor lost 2.3 percent.
The Shanghai Composite Index rose 0.6 percent, while the Hang Seng China Enterprises Index (HSCEI) added 0.7 percent. Guangzhou Automobile Group Co. jumped 7.6 percent after sales increased and China Resources Power Holdings Co. tumbled after saying it will issue shares for a merger. India’s S&P BSE Sensex (SENSEX) added 0.7 percent as a report showed industrial production growth quickened in March. Pakistan’s KSE 100 Index (KSE100) rallied 1.3 percent to a record ahead of elections tomorrow.
The extra yield investors demand to own emerging-market debt over U.S. Treasuries dropped four basis points, or 0.04 percentage point, to 262 basis points, according to JPMorgan Chase & Co.’s EMBI Global Diversified Index.