Emerging ETF Declines Amid Global Manufacturing SlowdownJulia Leite
The exchange-traded fund tracking developing-nation shares fell the most in two weeks as manufacturing from China to the U.S. and Australia slowed, stoking concern that the global economy is faltering.
The iShares MSCI Emerging Markets Index dropped 1.1 percent to $42.82 in New York, after surging 2.5 percent in the previous two days. The MSCI Emerging Markets Index lost 0.1 percent to 1,038.12 with markets in Latin America and most of developing Europe and Asia closed for a holiday. The Bloomberg China-US Equity Index of the most-traded Chinese companies in the U.S. slid 1.4 percent to 91.74, while the Standard & Poor’s 500 Index fell 0.9 percent after rising to a record yesterday.
“The economic data has been weak across the board,” Peter Jankovskis, who helps oversee $3 billion as co-chief investment officer of Lisle, Illinois-based Oakbrook Investments LLC, said by phone. Data today is “consistent with a slower growth horizon for the world, which would have negative implications for many emerging markets,” he said.
The iShares MSCI emerging-markets ETF followed U.S. stocks lower as data showed that manufacturing in the U.S. expanded in April at the slowest pace in four months. The Institute for Supply Management’s factory index fell to 50.7 from the prior month’s 51.3. The median forecast of 84 economists surveyed by Bloomberg was for 50.5. A reading of 50 is the dividing line between expansion and contraction.
The Federal Reserve will maintain its bond buying program at a pace of $85 billion a month, though it is prepared to raise or lower the level of purchases as economic conditions evolve, the Federal Open Market Committee said today at the conclusion of a two-day meeting in Washington.
Chinese manufacturing grew at a weaker pace in April, a sign the slowdown in the world’s second-largest economy may be extending into the second quarter. The Purchasing Managers’ Index was at 50.6 in April, compared with the 50.7 median forecast of 31 analysts and a March reading of 50.9. The Australian Industry Group said its manufacturing index plunged 7.7 points to 36.7 last month, a four year low.
The Chicago Board Options Exchange Emerging Markets ETF Volatility Index, a measure of options prices on the fund and expectations of price swings, jumped 9.4 percent to 20.27, the highest level since April 19.
The Bank of New York Mellon Korea ADR Index, which tracks American depositary receipts of South Korean companies, lost 1.2 percent, falling for the first time this week. The Bank of New York Mellon India ADR Index fell 0.9 percent.
Indonesian stocks gained a third day to a record on optimism over earnings growth at some banks. PT Bank Rakyat Indonesia, the country’s third largest lender by assets, provided the biggest boost to the Jakarta Composite Index, which gained 0.5 percent.
The Kuwait Stock Exchange Index climbed 1.8 percent to a three-year high on bets investors will buy more shares using money from government purchases of citizens’ loans. Saudi Arabia’s Tadawul All Share Index fell 0.1 percent, while Dubai’s DFM General Index and Abu Dhabi’s gauge were little changed. Qatari stocks lost 0.1 percent.