Emerging-Market Stocks Decline on OECD Growth ForecastMatthew Kanterman, Zahra Hankir and Ian Sayson
Emerging-market stocks fell for the first time in four days after the Organization for Economic Cooperation and Development cut its global outlook. Turkey’s lira climbed as the central bank tightened access to credit.
The MSCI Emerging Markets Index slipped 0.1 percent to 1,024.53. Brazil’s Ibovespa dropped the most among major equity gauges in the Americas as oil producer Petroleo Brasileiro SA tumbled. The Shanghai Composite Index snapped a three-day rally as financial and dairy companies plunged. The Borsa Istanbul National 100 Index decreased 1.3 percent, while the lira capped the longest advance since April after the central bank’s bid to contain exchange-rate volatility and curb inflation.
The world economy will probably expand 2.7 percent this year and 3.6 percent next year, instead of the 3.1 percent and and 4 percent predicted in May, the Paris-based OECD said in a semi-annual report today. Federal Reserve Chairman Ben S. Bernanke is scheduled to speak in Washington today after Fed Bank of New York President William Dudley said yesterday that while he’s “more hopeful” the U.S. economy is strengthening, it’s not enough to warrant stimulus cuts yet.
“If you’re an emerging-market manager, you may want to take profit where you have it,” Quincy Krosby, a market strategist for Newark, New Jersey-based Prudential Financial Inc., which oversees more than $1 trillion of assets, said by phone. “Some have been questioning the strength of global growth. You’ve got Bernanke speaking to a very professional audience. They are going to probe as much as they can to get any change in sentiment regarding the taper.”
Seven out of 10 groups in the MSCI Emerging Markets Index fell today, led by consumer-staple stocks. The iShares MSCI Emerging Markets Index exchange-traded fund dropped 0.6 percent to $42.37. The Chicago Board Options Exchange Emerging Markets ETF Volatility Index, a measure of options prices on the fund and expectations of price swings, slid 1.7 percent to 23.34.
Brazil’s Ibovespa dropped the most in seven weeks as Petrobras slid after surging almost 10 percent in three days. The real slipped from a two-week high as concern the government’s budget deficit will lead to a reduction in the nation’s credit rating offset efforts to support the currency.
Most Russian stocks fell as OAO Mechel snapped a three-day 31 percent gain. The coking-coal producer is seeking new debt covenants for the next two years and is asking lenders to set a ratio of 10 times net debt to earnings before interest, taxes, depreciation and amortization at the end of 2014, Vedomosti reported, citing people familiar with the matter.
The Borsa Istanbul National 100 Index dropped after climbing more than 5 percent over the previous four days. The lira rose to the highest level since Oct. 31. Poland’s WIG20 Index fell, led by PGE SA. The power producer sank after Chief Executive Officer Krzysztof Kilian resigned amid a dispute over an 11.6 billion-zloty ($3.8 billion) investment.
The Shanghai Composite Index dropped for the first time in four days after valuations jumped to a one-month high. Baby formula maker Zhejiang Beingmate Technology Industry & Trade Co. plunged 5.6 percent on speculation the easing of China’s one-child policy will boost earnings. Haitong Securities Co. slumped 2 percent after rallying 18 percent in three days.
The S&P BSE Sensex rose to the highest in two weeks, led by industrial companies and banks, amid bets inflows will increase as the U.S. maintains its record stimulus. Engineering company Larsen & Toubro Ltd. climbed to its highest level in four months. State Bank of India gained for a fourth day.
The premium investors demand to own emerging-market debt over U.S. Treasuries fell two basis points, or 0.02 percentage point, to 327 basis points, according to JPMorgan Chase & Co.