Emerging Stocks Fall as Russian Shares Slump While Lira WeakensNatasha Doff and Nguyen Kieu Giang
Emerging-market stocks posted their first back-to-back loss in a month, as Russian equities tumbled and Indian shares retreated from a record.
The Micex Index slid in Moscow as OAO Gazprom and OAO Sberbank sank at least 2.3 percent amid renewed tension in Ukraine. South African stocks fell as its economy contracted for the first time since 2009. Turkish shares ended a five-day rally as consumer confidence retreated. Brazil’s Ibovespa fell the most in the Americas raw-material exporters including iron-ore producer Vale SA sank on concern growth is slowing in China.
The MSCI Emerging Markets Index slipped 0.9 percent to 1,032.88, paring its decline this month to 3.8 percent. Ukraine’s President-elect Petro Poroshenko vowed to step up military action against pro-Russian separatists in the east. In Moscow, Foreign Minister Sergei Lavrov said any escalation would be a “colossal mistake.” The Shanghai Composite Index has slid 3.9 percent this year amid concern economic expansion is slowing.
“Emerging-market stocks are falling on the Ukrainian conflict and continued worries about Chinese growth,” Maarten-Jan Bakkum, an emerging-markets strategist at ING Investment Management Co. in The Hague, said by e-mail. “Markets have been strong over the past weeks, so a bit of correction is not that strange.”
The developing-nation’s gauge has climbed 3 percent this year, taking its valuation to 10.7 times projected 12-month earnings, data compiled by Bloomberg show. The MSCI World Index has increased 2.8 percent in 2014 and trades at multiple of 14.3 times.
All 10 industry groups in the developing-nation gauge fell, led by energy companies and utilities.
Gazprom, the world’s biggest natural gas producer, dropped the most in a month. The Micex fell 2.2 percent, the the steepest loss since April 15. It added 0.7 percent yesterday to the highest since Feb. 26. Russia’s ruble dropped 0.6 percent against the dollar today, its second consecutive decline.
Ukraine’s Poroshenko pledged a “sharp increase” in the “efficiency” of military operations against rebels in the country’s eastern cities.
“The clash between the Ukrainian army and rebels in Donetsk yesterday has driven Russian stocks down, as well as Moscow’s calls for the Ukrainian army to back off,” Bakkum said. “With the conflict in the Ukraine still fragile and the prospects for emerging markets far from great, the outlook for the Russian market after the recent rally is not that good.”
The lira weakened 0.9 percent after a report showed Turkish consumer confidence fell this month. The Borsa Istanbul 100 Index slid 0.4 percent, retreating for the first time in six days.
The Ibovespa fell 1.4 percent, Vale dropped 0.9 percent. The Standard & Poor’s GSCI Index of 24 raw materials declined 0.5 percent. Commodity producers account for about a third of the Brazilian benchmark’s weighting, according to data compiled by Bloomberg.
The FTSE/JSE Africa All Shares Index in Johannesburg fell 0.4 percent, retreating from a record, as a report showed gross domestic product fell 0.6 percent in the first quarter from a 3.8 percent advance in the previous three months. The rand dropped 0.9 percent against the dollar.
The S&P BSE Sensex Index fell for the first time in four days, dropping 0.7 percent. It has climbed 16 percent this year and is valued at 15.1 times projected 12-month earnings.
The Shanghai Composite fell 0.3 percent. The Hang Seng China Enterprises Index of mainland companies listed in Hong Kong lost 0.4 percent.
Hyundai Motor Co. and Kia Motors Corp. tumbled 2.6 percent in Seoul, dragging the Kospi index down 0.6 percent. Samsung Electronics Co. fell 1.1 percent, contributing the most to the MSCI Emerging Markets Index’s decline.
Vietnam’s VN Index rose 1.6 percent to the highest level since May 7. The gauge is down 9 percent from this year’s peak on March 24. Indonesia’s stock market is closed for a holiday.