Emerging-Market Stocks Fall as Exporters Sink on Growth Outlook

Emerging-market stocks fell the most in a month as Brazil’s Ibovespa led a decline among the biggest equity benchmarks in developing nations after a drop in raw-material prices sapped commodity exporters.

The MSCI Emerging Markets Index lost 1.1 percent to 1,027.38, reducing its fourth monthly gain. A gauge of technology stocks slipped for a second day from a record, led by Taiwan Semiconductor Manufacturing Co., which declined 2.1 percent. The Standard & Poor’s GSCI index of raw materials dropped 0.7 percent as a report showing U.S. consumer spending fell in April stoked concern that slowing growth will reduce demand for commodities in the world’s largest economy.

The Ibovespa sank 1.9 percent. Commodity producers account for about a third of the benchmark’s weighting. Brazil’s gross domestic product increased 1.9 percent in the first quarter, trailing the median estimate of 2 percent among economists surveyed by Bloomberg. Russia’s Micex Index pared its biggest monthly gain in five years.

“We’re continuing to be in an environment where emerging-market growth is slowing,” Timothy Ghriskey, chief investment officer at New York-based Solaris Asset Management LLC, which helps manage about $1.5 billion in assets, said by phone. “You need a pick-up in growth in China or an acceleration in growth in the developed world, which will create export demand. And you don’t see a pick-up in growth in the developed world at this point.”

Russia, India

The emerging-market stock benchmark gained 3.2 percent in May as easing political tension with Ukraine attracted investors to Russian stocks and the election of a new leader in India fueled a record rally in the S&P BSE Sensex Index.

All 10 industry groups in the developing-market index fell today, led by energy and raw-material producers. A gauge of technology companies fell 0.9 percent as Taiwan Semiconductor declined 2.1 percent.

The Micex dropped 1.1 percent today, reducing its gain in May to 9.7 percent. The Sensex slipped 0.1 percent, paring its monthly advance to 8 percent.

South Africa’s rand weakened 1.6 percent after the country’s trade gap unexpectedly expanded in April. The shortfall swelled to 13 billion rand ($1.2 billion) from 11.9 billion rand in March. That compared with a median estimate of 11.3 billion rand in a Bloomberg survey of 15 economists.

The lira slid 0.5 percent as Turkey’s trade deficit expanded to $7.21 billion in April, compared with a $6.55 billion median estimate of 12 economists surveyed by Bloomberg.

Thailand Coup

The Thai baht depreciated 1.4 percent this month, the worst performance in Asia, as global investors pulled about $2 billion from the nation’s stocks and bonds.

Army Chief Prayuth Chan-Ocha seized power on May 22 after seven months of protests that began in October and led to clashes that claimed 28 lives. The military government said returning the country to civilian rule soon is “impossible” because the threat of further violence means it can’t guarantee an election would be free and fair.

Stocks traded before changes to MSCI Inc.’s index compositions effective June 2. Wumart Stores Inc. tumbled 6.7 percent in Hong Kong before being removed from the MSCI China Index. OAO Alrosa, Russia’s biggest diamond producer, jumped as high as 2.9 percent before trading little changed as the shares are being added to the MSCI Russia Index.

The Shanghai Composite fell 0.1 percent. The Hang Seng China Enterprises Index gained 0.6 percent in Hong Kong. Markets in China, Hong Kong and Taiwan will be closed on June 2 for public holidays.

The emerging-markets stock gauge has climbed 2.5 percent this year and trades at 10.6 times projected 12-month earnings, data compiled by Bloomberg show. The MSCI World Index has increased 3.2 percent and is valued at a multiple of 14.4.

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