Emerging Stocks Extend Longest Slump in One Month on China Data
Emerging-market stocks fell a third day, capping the longest slide in a month, as Chinese industrial output trailed estimates and India’s trade deficit widened. Homebuilder Gafisa SA paced losses in Brazil’s Ibovespa.
Cnooc Ltd. (883), China’s largest offshore energy explorer, slid 2.4 percent in Hong Kong, while Tata Steel Ltd. (TATA), India’s biggest maker of the alloy, had the biggest decline since March. OAO Mechel sank 4.7 percent in Moscow as first-quarter coal production fell. Brazilian shares fell a fourth day as Gafisa sank after reporting a quarterly loss. Pakistan’s shares climbed to a record after this weekend’s election.
The MSCI Emerging Markets Index declined 0.8 percent to 1,041.90. Stocks retreated after reports showed Chinese production grew 9.3 percent in April from a year earlier, missing estimates, while fixed-asset investment unexpectedly decelerated. India’s trade deficit widened in April to $17.8 billion from $10.31 billion in March.
“There has been a deceleration of economic activity in China,” Philip Orlando, the New York-based chief equity strategist at Federated Investors Inc., said in a telephone interview today. His firm manages about $377 billion. “We don’t see a hard landing, but it’s a legitimate fear. Everyone is concerned about China slowing.”
Nine out of 10 groups in the emerging-market gauge fell as commodity companies had the biggest losses. The broader measure slid 1.3 percent this year, after briefly erasing its 2013 drop last week. That compares with a 12 percent gain in the MSCI World Index of developed-country stocks.
The iShares MSCI Emerging Markets exchange-traded fund slid 0.9 percent to $43.17. The Chicago Board Options Exchange Emerging Markets ETF Volatility Index, a measure of options prices on the fund and expectations of price swings, lost 1.2 percent to 19.36, snapping three days of gains.
Brazil’s Ibovespa lost 1.2 percent, capping the longest losing streak since March 25. Gafisa dropped 5 percent, while power utility Light SA led declines among utilities after it posted earnings that were below analysts’ estimates.
Russian equities fell for a second day as crude oil, the nation’s chief export earner, retreated. Mechel, the country’s biggest coking-coal producer, sank the most since April 17. Benchmark gauges in Hungary, Poland and Turkey advanced.
The Shanghai Composite Index declined 0.2 percent, while the Hang Seng China Enterprises Index slumped 2.1 percent. Cnooc had the biggest decline in about a month. India’s S&P BSE Sensex tumbled 2.1 percent, the most in a year. Tata Steel sank 4.2 percent.
Pakistan’s KSE 100 Index jumped 1.7 percent to a record as unofficial election results showed a party led by former Prime Minister Nawaz Sharif winning the most seats in parliament.
The extra yield investors demand to own emerging-market debt over U.S. Treasuries was unchanged at 264 basis points, according to JPMorgan Chase & Co.’s EMBI Global Diversified Index.