Emerging Stocks Decline on China as Brazil’s Real Tumbles

Emerging-market stocks capped the biggest decline in three months, led by commodity and technology companies, after data showed a slowdown in Chinese manufacturing. Brazil’s real led losses among major currencies.

The MSCI Emerging Markets Index retreated 1.5 percent to 1,004.24. Gold Fields Ltd. and Usinas Siderurgicas de Minas Gerais SA paced declines in raw-material producers, while Samsung Electronics Co. slid 2 percent. Property developers China Vanke Co. and Poly Real Estate Group Co. decreased at least 3 percent. The real slumped 1.4 percent and Indonesia’s rupiah dropped to the weakest level since March 2009.

Stocks fell as a decline in Chinese manufacturing added to concern that a recovery in the world’s second-largest economy will falter as leaders start to implement the broadest policy reforms since the 1990s. Investors also monitored U.S. economic data for clues on when the Federal Reserve will start tapering stimulus. A government report showed applications for unemployment benefits decreased to the lowest level in almost two months, showing further healing in the labor market.

“When China sniffles, the rest of the emerging markets gets a cold,” Lawrence Creatura, a Rochester, New York-based fund manager at Federated Investors Inc., which oversees about $364 billion, said by phone. “The initial claims fall into the ‘good news is bad news’ category. An improving labor market could lead the Fed toward a taper sooner rather than later.”

Emerging ETF

All 10 groups in the MSCI Emerging Markets Index fell today by at least 1 percent. The iShares MSCI Emerging Markets Index exchange-traded fund dropped 0.1 percent to $41.75. The Chicago Board Options Exchange Emerging Markets ETF Volatility Index, a measure of options prices on the fund and expectations of price swings, advanced 0.2 percent to 24.16.

Brazil’s Ibovespa fell to a one-week low as slower growth in China’s manufacturing spurred concern that expansion will falter in Brazil’s top trading partner. Usiminas, as the steelmaker is known, slumped 3.5 percent. The real sank amid concern Brazil’s budget deficit will lead to a cut in the nation’s credit rating.

Russian stocks dropped for a second day as OAO Rostelecom, a state-controlled telecommunications operator, tumbled 4.2 percent on concern a share sale may dilute investors’ stakes. Benchmark equity gauges in Turkey and Poland retreated. Gedeon Richter Nyrt., Hungary’s biggest drugmaker, slumped after a U.S. regulator denied approval to a drug that lies at the heart of the company’s growth plans.

South Africa

The FTSE/JSE Africa All Shares Index dropped 1 percent, led by commodity producers. Gold Fields and AngloGold Ashanti Ltd. sank more than 4.3 percent as the precious metal retreated to the lowest level since July.

China Vanke and Poly Real Estate Group capped the biggest declines in two months after Finance Minister Lou Jiwei told the People’s Daily the government will raise taxes for owning properties. The yuan closed steady in Shanghai. The People’s Bank of China said the country doesn’t benefit any more from increases in its foreign-currency holdings.

India’s S&P BSE Sensex slipped 2 percent as ICICI Bank Ltd. drove a measure of lenders to the lowest level in a week. Larsen & Toubro Ltd. decreased the most since Nov. 11, pacing losses among makers of capital goods. Indonesia’s rupiah dropped 0.4 percent to 11,703 per dollar as of 4:22 p.m. in Jakarta, prices from local banks show. It reached 11,733 earlier, the weakest level since March 31, 2009.

The premium investors demand to own emerging-market debt over U.S. Treasuries rose three basis points, or 0.03 percentage point, to 328 basis points, according to JPMorgan Chase & Co.