Emerging Stocks Retreat to Four-Month Low on China DataIan Sayson and Lyubov Pronina
Emerging-market stocks fell to a four-month low as China’s service industry data fueled concern the economy is slowing. Turkey’s lira weakened to a 10-year low while the nation’s shares dropped for a third day.
Industrial & Commercial Bank of China Ltd. led a 2.6 percent slump in the Hang Seng China Enterprises Index in Hong Kong. The lira headed toward a record low as a corruption scandal pushed the currency to its most oversold level in a decade, while Thailand’s stocks extended a rout on persistent political uncertainty. Most Brazilian stocks rose as phone company Oi SA rallied 17 percent.
The MSCI Emerging Markets Index lost 1.2 percent to 979.40 at 2:39 p.m. in New York, set for the lowest since Sept. 9. The measure is headed for a 1.6 percent decrease this week after economic data from China this week showed two measures of factory output declined while the non-manufacturing gauge fell to a four-month low in December.
“China data along with the political issues in Thailand and Turkey affected EM stocks,” John-Paul Smith, the global emerging-markets equities strategist at Deutsche Bank AG in London, said by e-mail. “The real problem is not the data per se, but investors positioned for a December/January rally when the structural fundamentals are negative.”
MSCI’s developing-nation gauge lost 5 percent last year and trades at 10.8 times 12-month projected earnings, data compiled by Bloomberg show. That compares with a rally of 24 percent for the MSCI World Index, which is valued at a multiple of 14.7.
The iShares MSCI Emerging Markets Index exchange-traded fund fell 0.2 percent to $40.1. The Chicago Board Options Exchange Emerging Markets ETF Volatility Index, a measure of options prices on the fund and expectations of price swings, added 0.4 percent to 25.43.
The Hang Seng China Enterprises Index of mainland companies listed in Hong Kong fell for a second day to the lowest level since Nov. 14. ICBC, China’s biggest lender, slid 2.7 percent to a four-month low. The Shanghai Composite Index sank 1.2 percent.
Poland’s WIG30 Index retreated 0.6 percent. Stocks in South Africa slipped 0.8 percent, the steepest decrease since Dec. 12 and snapping a 10-day winning streak, led by luxury retailer Cie Financiere Richemont SA. The rand added 0.4 percent amid a rally in platinum and gold, South Africa’s main exports.
Gold extended its rally following the biggest annual loss in three decades. Platinum, used to make jewelry and catalytic converters in cars, also gained.
The lira lost 0.3 percent. The currency’s 14-day relative-strength index climbed to a 10-year high of 74 this week, measured on a quarterly basis, signaling a turnaround may be imminent, data compiled by Bloomberg show. The Borsa Istanbul 100 equity Index dropped 1.5 percent, paring its gain this week to 3.3 percent.
The premium investors demand to own emerging-market debt over U.S. Treasuries slipped three basis points, or 0.03 percentage point, to 308 basis points, according to JPMorgan Chase & Co. indexes. All but one of 10 industry groups in the MSCI emerging measure decreased today, led by industrial and energy stocks.
Oi rallied the most since October 2008 on speculation that the phone company may buy some assets from Tim Participacoes SA.
China’s non-manufacturing Purchasing Managers’ Index fell to 54.6 in December from 56 in November, the Beijing-based National Bureau of Statistics and China Federation of Logistics and Purchasing said. A reading above 50 signals expansion.
Chinese shares also dropped on concern investors are withdrawing money before new share sales. Five companies were approved to sell initial public offering shares, according to exchange statements, bringing the total to 16 already endorsed for this year.
South Korea’s Kospi index lost 1.1 percent to the lowest close since Sept. 4. Samsung Electronics Co., the world’s biggest maker of smartphones and televisions, fell 1 percent, extending yesterday’s 4.6 percent slump. Hyundai Mipo Dockyard Co. slid the most since October after forecasting lower orders.
Thailand’s SET Index dropped 0.5 percent, paring earlier losses of as much as 1.8 percent, after a 5.2 percent tumble yesterday. The worst start to a year for Thai stocks since at least 1988 spurred Aberdeen Asset Management Plc to buy after valuations fell to the lowest levels in 18 months.
Prime Minister Yingluck Shinawatra’s administration has endured more than two months of street demonstrations that protest leaders say are aimed at erasing her family’s influence.
Indonesia’s rupiah weakened the most since Dec. 13 and the Jakarta Composite Index lost 1.6 percent.