Emerging-Market Stocks Drop on Fed as Currencies Tumble
Emerging-market stocks fell, led by Thai and Turkish shares, as concern grew that the Federal Reserve will signal reduction in stimulus. India’s rupee and Russia’s ruble paced losses among developing-nation currencies.
Siam Commercial Bank Pcl and PTT Pcl (PTT) led declines in Bangkok on speculation overseas investors may add to the biggest monthly net sales in almost two years. GCL-Poly Energy Holdings Ltd. (3800) plunged after a unit of China Investment Corp. sold 1.2 billion shares. Turkey’s shares tumbled as the central bank kept its benchmark rate unchanged amid unrest. Brazil’s Ibovespa stock index climbed for the first time in three sessions, led by companies controlled by billionaire Eike Batista.
The MSCI Emerging Markets Index retreated 0.4 percent to 953.54, extending this month’s decline to 5.5 percent. The Federal Open Market Committee starts a two-day policy meeting almost a month after Fed Chairman Ben S. Bernanke said policy makers could scale back stimulus efforts if the employment outlook showed “sustainable improvement.”
“Emerging markets haven’t liked the taper talk,” Jeff Papp, a senior analyst at Oberweis Asset Management Inc., which manages $700 million in assets, said in a telephone interview from Lisle, Illinois. “Whatever they say could drive the markets in the immediate term.”
Seven out of 10 groups in the emerging-market index fell today as consumer staple and health-care shares had the biggest losses. The broad measure has lost 9.6 percent this year, compared with an 11 percent advance in the MSCI World Index of developed-country stocks.
The iShares MSCI Emerging Markets Index exchange-traded fund rose 0.4 percent to $39.84. The Chicago Board Options Exchange Emerging Markets ETF Volatility Index, a measure of options prices on the fund and expectations of price swings, slid 4 percent to 26.19.
Brazil’s Ibovespa (IBOV) gained 0.8 percent led by oil company OGX Petroleo & Gas Participacoes SA, which surged 12 percent. Miner MMX Mineracao & Metalicos SA and port developer LLX Logistica SA added at least 6.4 percent. The real touched a four-year low, prompting the central bank to intervene.
Russia’s Micex Index added 0.7 percent as OAO Rostelecom (RTKM) rallied after Sberbank CIB recommended buying the stock, citing its slump this year. The shares have lost 19 percent in Moscow since the end of 2012. The ruble sank the most in two months as oil fell and investors bet on declines after the Finance Minister supported a weaker currency.
Turkiye Garanti Bankasi AS (GARAN) and Turkiye Halk Bankasi AS paced losses in Istanbul. The central bank had been cutting rates this year to spur a slowing economy and prevent capital inflows from strengthening the lira. The bank made no reference in its statement today to the protests that have engulfed Istanbul and other cities in the past three weeks, leading business and tourism groups to warn of risks to the economy.
India’s rupee dropped the most in a week, while the S&P BSE Sensex (SENSEX) ended a two-day advance. Oil & Natural Gas Corp., the nation’s largest explorer, fell to a two-month low.
The Shanghai Composite Index (SHCOMP) added 0.1 percent after a unit of nation’s sovereign wealth fund boosted its stakes in the biggest lenders. Industrial & Commercial Bank of China Ltd. added 1 percent. The Hang Seng China Enterprises Index retreated, while GCL-Poly sank 12 percent, the biggest decline since October 2011.
Thai’s SET Index slid 3 percent, the steepest loss in a week. Siam Commercial Bank, the nation’s third-biggest lender by total assets, and PTT were the biggest drags on the index.
The extra yield investors demand to own emerging-market debt over U.S. Treasuries rose four basis points, or 0.04 percentage point, to 320 basis points, according to JPMorgan Chase & Co.’s EMBI Global Diversified Index.