Emerging Stocks Fall on Fed Bets as Gold Producers Tumble
Emerging-market stocks fell for the first time in seven days as investors weighed prospects for Federal Reserve stimulus cuts and a drop in gold sank producers. Russia’s Micex Index (INDEXCF) snapped the longest advance since 2010.
The MSCI Emerging Markets Index slid 0.2 percent to 990.41, after gaining 6.2 percent in the previous six days. Mexico (MEXBOL)’s IPC Index slumped 2.1 percent for the biggest drop among major equity benchmarks in the Americas. Tata Steel Ltd. (TATA) paced losses in Mumbai, while Gold Fields Ltd. (GFI) fell 4.5 percent in Johannesburg as gold futures sank the most in nine weeks. Russia’s Micex Index posted the first decline in nine days.
Investors weighed prospects for Fed’s stimulus before the central bank meets next week. The benchmark measure for emerging markets has lost 5.5 percent since May 22, when the Fed signaled its asset-buying program could be trimmed if the economy showed a sustained recovery. A Bloomberg survey on Sept. 6 showed the Fed will cut bond purchases by $10 billion this month.
“There are a lot of things the market is chewing on. The Fed is one of them,” Kevin Caron, a Florham Park, New Jersey-based market strategist at Stifel Nicolaus & Co., which oversees about $150 billion, said by phone. “If the expectation is that they’ll cut back more in terms of stimulus, it will tend to hurt emerging markets.”
Seven out of 10 groups in the MSCI Emerging Markets Index retreated today, led by health-care and energy shares. The broad measure tumbled 6.1 percent this year to trade at 10.5 times projected earnings, according to data compiled by Bloomberg. That trails the 13.9 valuation of the MSCI World Index, which has rallied 15 percent in 2013.
The iShares MSCI Emerging Markets Index exchange-traded fund, the developing-nation ETF, fell 1.2 percent to $40.89. The Chicago Board Options Exchange Emerging Markets ETF Volatility Index, a measure of options prices on the fund and expectations of price swings, rose 0.4 percent to 25.16.
Mexico’s IPC dropped for a second day, led by Industrias Penoles SAB, the nation’s second-biggest mining company by market value. Brazil’s Ibovespa (IBOV) declined 0.5 percent as Petroleo Brasileiro SA, the state-run crude producer, sank. Clothing seller Cia. Hering led consumer stocks higher after a report showing retail sales in Brazil rose more than forecast.
The Micex dropped 0.3 percent in Moscow as OAO Russian Grids and Federal Grid Co. retreated more than 3 percent. The Economy Ministry, which is seeking ways to curb consumer-price growth and spur expansion, has proposed freezing utilities’ prices next year. President Vladimir Putin supported the measure at a budget meeting yesterday.
The Borsa Istanbul National 100 Index rose 1.3 percent for the biggest advance among major emerging-market indexes, led by banks. Poland’s WIG20 Index (WIG20) gained for a fifth day in the longest rally in a month, while Hungarian stocks retreated.
The FTSE/JSE Africa All Shares Index added 0.8 percent as Naspers Ltd. (NPN) rallied 2.6 percent. Gold Fields slumped for a ninth day in the longest losing streak since May 2008, while AngloGold Ashanti Ltd. dropped to the lowest level in a month.
India’s S&P BSE Sensex slid after a five-day rally drove valuations to a seven-week high. Tata Steel slumped 4.1 percent, and aluminum maker Hindalco Industries Ltd. (HNDL) fell 2.8 percent. The rupee snapped its longest rally in almost a year.
China’s stocks rose to a three-month high, led by banks and brokerages, after Premier Li Keqiang said he would accelerate financial reform. Shanghai Pudong Development Bank (600000) Co. surged 8.7 percent, extending this month’s gain to 36 percent, after Li pledged to push forward yuan convertibility.
South Korea’s won touched the strongest level in more than six months as the central bank kept its policy rate at the lowest since 2010. Thailand’s baht climbed to a three-week high as overseas investors added to their holdings of the nation’s assets on optimism China’s economy is gaining traction.
The premium investors demand to own emerging-market debt over U.S. Treasuries fell one basis point, or 0.01 percentage point, to 341 basis points, according to JPMorgan Chase & Co.
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