Emerging Stocks Fall on China as Russia Ruble Yields Jump

Emerging-market stocks declined to a one-month low, led by industrial and technology companies, on concern that a slowdown in China will hamper global economic growth. Russia’s ruble bond yields increased to a record.

The MSCI Emerging Markets Index retreated 1.2 percent to 944.63, the lowest level since Feb. 10. The Hang Seng China Enterprises Index of mainland stocks listed in Hong Kong tumbled to an eight-month low and approached a bear market. Russia’s Micex Index sank 2.6 percent, while yields on government bonds due February 2027 surged to the highest level since the securities were issued in February 2012. Dubai’s DFM General Index led a rout in Persian Gulf equity benchmarks.

Equities slumped on speculation a report tomorrow will show a slowdown in Chinese industrial output, after the biggest drop in exports since 2009. The data highlight the challenges for Premier Li Keqiang in achieving this year’s economic-growth target of 7.5 percent. Ukraine warned Russia is amassing troops near its border as Prime Minister Arseniy Yatsenyuk visits Washington to step up the search for financial aid.

“A lot of it is just slowing growth in China that appears to be driving emerging-market stocks on a daily basis,” Jack Ablin, who oversees $66 billion as chief investment officer at BMO Private Bank, said by phone from Chicago. “I would characterize emerging as cheap, but it’s not catching any momentum yet.”

ETF Slumps

Today’s decline drove the MSCI Emerging Markets Index’s valuation to 10 times estimated earnings, compared with a multiple of 14.1 for developed nations, according to data compiled by Bloomberg.

The iShares MSCI Emerging Markets Index exchange-traded fund rose 0.2 percent to $38.89. The premium investors demand to own emerging-market debt over U.S. Treasuries rose 0.03 percentage point to 318 basis points, according to JPMorgan Chase & Co.

Brazil’s Ibovespa gained for a second straight day as a rebound in iron-ore prices boosted Vale SA, outweighing losses in companies that rely on domestic consumption after data showed consumer prices increased more than forecast.

Russia’s Micex Index dropped to the lowest level since May 2012, while the ruble weakened for a fourth day against the central bank’s dollar-euro basket. Government bonds due February 2027 slid for a fourth day, lifting the yield 40 basis points to 9.36 percent.

China Data

The Hang Seng China Enterprises Index, also known as the H-share index, slid 1.6 percent, its lowest close since July 10. The measure has dropped 19 percent from a Dec. 2 peak, nearing what some traders consider a bear market.

China’s industrial production probably rose 9.5 percent in the January-February period from a year earlier, based on the median estimate of analysts surveyed by Bloomberg News. Output expanded 9.7 percent in December from a year earlier.

China combines data for industrial output, retail sales and fixed-asset investment for January and February, citing distortions from the weeklong Lunar New Year holiday, whose timing differs each year.

Dubai’s DFM General Index retreated 3.8 percent, the most since Aug. 27. The measure, which has more than doubled in the past 12 months, fell below the 4,000-level for the first time in four weeks. Abu Dhabi’s benchmark gauge slumped 2.8 percent, while Qatar’s index lost 1.4 percent.

(Corrects time period for China data in 10th paragraph.)
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