Emerging-Market Stocks Decline as Ukraine Yields AdvanceJulia Leite, Zahra Hankir and Ian Sayson
Emerging-market stocks dropped for the first time in four days as Petroleo Brasileiro SA led energy producers lower. Ukraine’s bond yields jumped to a record after police cracked down on the biggest protests since 2004.
The MSCI Emerging Markets Index fell 0.5 percent to 1,013.44. Petrobras sank 9.2 percent as Brazil failed to meet a request by the company to disclose a clear policy for phasing out fuel subsidies that have cut earnings. The ChiNext Index of smaller companies slid on concern China’s plan to restart initial public offerings will divert funds from existing shares. Ukraine’s yields surged on President Viktor Yanukovych’s decision to halt talks on closer European Union ties.
Stocks joined a slump in global equities after better-than-expected manufacturing data in the U.S., the U.K., the euro area and China bolstered speculation global central banks will curtail economic stimulus. The benchmark measure for stocks in developing nations has slid as much as 16 percent since May 22, when the Federal Reserve signaled its asset-buying program could be trimmed if the economy showed sustained improvement.
“There is a point where good news will become bad news,” Alan Gayle, senior investment strategist and director of asset allocation at RidgeWorth Capital Management, said by phone from Atlanta. His firm oversees about $49 billion. “When you have stronger than expected data like this, it will raise concerns the Fed may begin tapering. Those risks continue to elevate.”
The iShares MSCI Emerging Markets Index exchange-traded fund dropped 2.1 percent to $41.46. The Chicago Board Options Exchange Emerging Markets ETF Volatility Index, a measure of options prices on the fund and expectations of price swings, advanced 9 percent to 24.80.
Brazil’s Ibovespa sank to a three-month low after Petrobras, as Petroleo Brasileiro is known, didn’t disclose any changes in policies following a board meeting Nov. 29. The real fell to the lowest since Sept. 4 amid concern the government’s deteriorating finances will lead to a credit rating cut.
Russian stocks erased gains as metals declined, dragging down producers including United Co. Rusal and OAO Mechel. The yield on Ukraine’s junk-rated sovereign’s dollar bonds due June 2014 increased 274 basis points to a record 19.34 percent as of 5:22 p.m. in Kiev. The cost to insure the nation’s bonds through credit-default swaps jumped 81 basis points to a two-week high, surpassing Cyprus as the costliest in Europe.
The ChiNext Index of companies with a median market value of $1 billion sank 8.3 percent, paring this year’s gain to 76 percent, as technology shares plunged. The Shanghai Composite Index slid 0.6 percent, trimming a loss of as much as 2.2 percent after data showed manufacturing topped estimates in November while PetroChina Co. and China Petroleum & Chemical Corp. rallied in the last 15 minutes of trading.
India’s benchmark stock index rose to a one-month high after a report showed the economy grew more than economist predicted in the last quarter and manufacturing expanded in November for the first time in four months. ICICI Bank Ltd. advanced to a one-month high, pacing a rally among its peers. Bharat Heavy Electricals Ltd. drove a gauge of capital goods companies to the highest level since May.
Indonesia’s rupiah and stocks rallied by the most since September after the country’s trade balance unexpectedly swung to a surplus. The government’s two-year bonds declined as inflation quickened. Thailand’s baht fell to a 12-week low and government bonds dropped as protesters seeking to oust Prime Minister Yingluck Shinawatra vowed more unrest after clashes left three dead in Bangkok at the weekend.
South Korea’s bonds fell, pushing the three-year yield to the highest level since June, as data showing the economy is improving increased demand for riskier assets. The won climbed for the second day.
The premium investors demand to own emerging-market debt over U.S. Treasuries fell four basis points, or 0.04 percentage point, to 330 basis points, according to JPMorgan Chase & Co.