Emerging Stocks Drop to Month Low as China Builders Fall

Emerging-market stocks fell for a fourth day, dragging the benchmark index to its lowest level in a month, as Chinese developers tumbled and India forecast the weakest economic growth in a decade.

Sino-Ocean Land Holdings Ltd. sank the most since July in Hong Kong after Kim Eng Securities (HK) Ltd. recommended shorting the stock on concern China may tighten property curbs earlier than expected. NTPC Ltd., the Indian power producer, slid to an eight-month low on a government plan to sell shares. Turkey’s benchmark Index fell for a third day, while Brazil’s real was the biggest gainer among emerging-market currencies.

The MSCI Emerging Markets Index lost 0.4 percent to 1,059.56 in New York, its lowest level since Jan. 1. Some of China’s largest cities may slow new home sale approvals in the first half to tame price “momentum,” the China Securities Journal reported today. India’s economy will expand 5 percent this fiscal year, data showed, the least since 2002-2003. The koruna gained for a third day versus the euro as the Czech central bank said further easing is “less urgent.”

“Policy tightening in China will put a break on growth,” Paul Joseph Garcia, who helps manage the equivalent of $3 billion at BPI Asset Management Inc., said by phone from Manila.

India’s economy is in a weaker position than before the global financial crisis and the central bank should refrain from cutting borrowing costs further until inflation is contained, the International Monetary Fund said yesterday.

“India can’t pursue a policy of growth at all cost. It has to grow while containing inflation,” Garcia said.

Inflation Risks

The iShares MSCI Emerging Markets Index exchange-traded fund, the ETF tracking developing-nation shares, fell 0.9 percent to 43.53, the lowest level this year. The Chicago Board Options Exchange Emerging Markets ETF Volatility Index, a measure of options prices on the fund and expectations of price swings, slipped 0.2 percent to 18.72.

The productivity of U.S. workers fell more than projected in the fourth quarter as the economy shrank, while other data showed claims for U.S. unemployment insurance payments fell last week, returning to levels seen in the second half of 2012 and signaling there is little change in the pace of firings from last year. European Central Bank President Mario Draghi said an economic recovery should begin later this year as an absence of inflation risks allows the bank to maintain record-low interest rates.

The Mexican IPC index slumped 1.2 percent in the biggest decline in three months. Cemex SAB, the largest cement maker, fell the most in eight months after reporting its 13th straight quarterly loss. Petrochemical maker Mexichem SAB sank 5.9 percent to the lowest price since Nov. 29.

Cosan Gains

Brazil’s Bovespa fell 1 percent, while the real strengthened 1.2 percent against the dollar. Preferred shares of Brazilian pulpmaker Suzano Papel e Celulose SA led declines on the index, losing 5.4 percent to the lowest level since Dec. 26.

All America Latina Logistica, the largest rail operator in South America, gained 4.1 percent after preliminary figures showed an adjusted measure of earnings rose 10 percent during the fourth quarter. Cosan SA Industria & Comercio rose 3.2 percent to the highest level since August 2006 after the Brazilian sugar producer’s expansion into energy helped push up profit more than analyst forecast in the quarter ended Dec. 31.

The BSE India Sensitive Index, or Sensex, fell 0.3 percent, erasing an earlier gain, and the rupee weakened for a second day. Russia’s Micex Index slid 0.3 percent to the lowest level in two weeks. Turkey’s ISE National 100 Index lost 2.4 percent in its third day of declines, the longest losing streak since Sept. 20.

Poland’s WIG 20 Index climbed 0.5 percent while Hungary’s BUX Index lost 0.7 percent.

Vehicle Sales

South Africa’s benchmark stock index gained 0.3 percent to a record. The nation’s business confidence jumped to a five-month high in January as vehicle sales rebounded and manufacturing expanded, the South African Chamber of Commerce and Industry said today.

The Bloomberg China-US Equity Index of the most-traded Chinese shares in the U.S. retreated 1.8 percent to the lowest price since Dec. 24 in New York. American depositary receipts of chip foundry Semiconductor Manufacturing International Corp. slid 12 percent after HSBC Holdings Plc cut it to neutral from the equivalent of buy.

The Hang Seng China Enterprises Index of companies fell 1.4 percent to the lowest level this year. The Shanghai Composite slid 0.7 percent, the first drop in nine days. The Shanghai Composite, which entered a bull market last month, will pull back by about 8 percent before resuming gains as buyers are exhausted after a surge in Chinese stocks, said Tom DeMark, founder of Market Studies LLC.

The gauge of domestic Chinese equities will fall to within a range of 2,230 to 2,250 after generating a sell signal on a Combo chart that’s designed to identify market tops and lows, said DeMark, who correctly called the market’s bottom last year.

Extra Yield

Measures of material and financial stocks in the MSCI Emerging Markets Index declined at least 0.7 percent, the most among 10 industry groups. The broader gauge has added 0.4 percent this year, trailing a 4.7 percent gain by the MSCI World Index. The developing-nations index trades at 10.3 times estimated profit, compared with the MSCI World’s multiple of 13.7, data compiled by Bloomberg show.

The extra yield investors demand to own emerging-market debt over U.S. Treasuries slipped three basis points, or 0.03 percentage point, to 274 basis points, according to JPMorgan Chase & Co.’s EMBI Global Index.

Arcelik AS, Turkey’s largest maker of fridges and washing machines, sank 2.9 percent, the most since Jan. 30 before reporting its 2012 results tomorrow.

Ipek Dogal Enerji Kaynaklari Ve Uretim AS jumped 5.6 percent, the most since Dec. 25. The company applied for three oil exploration licenses in Turkey, according to an announcement published in the Official Gazette today.

OAO Aeroflot, Russia’s biggest airliner, climbed 3.1 percent for a third day of gains in Moscow. Passenger volumes jumped 25 percent to 17.7 million in 2012 from a year earlier, it said yesterday.

Property Prices

India’s electricity generator NTPC dropped 2.5 percent after the government said yesterday it would sell a 9.5 percent stake today at a minimum price of 145 rupees per share to raise $2.1 billion, the biggest offering since March.

Sino-Ocean lost 4.1 percent, its sixth day of declines. Measures to curb property prices may be introduced earlier than expected because upward pricing pressure is robust, Karen Kwan, an analyst at Kim Eng, wrote in a report today. Its reliance on sales in Beijing and first-tier cities make Sino-Ocean a short candidate, according to the report.

China Foods Ltd. plunged 14 percent in Hong Kong, the biggest decline in the MSCI Emerging Markets Index. The company will record a “large decrease” in net income in 2012, it said in a statement yesterday.

BYD Co., the Chinese carmaker partly owned by Warren Buffett’s Berkshire Hathaway Inc., rose 6.6 percent in Hong Kong to the highest level since April 21, 2011. The company is in a good position to achieve its 2013 sales target, said Leping Huang, an analyst at Nomura Holdings Inc.

Before it's here, it's on the Bloomberg Terminal.