Emerging Stocks Fall to Six-Month Low With Russian SharesNatasha Doff and Anuchit Nguyen
Emerging stocks fell to a six-month low after briefly extending their decline from a September high to 10 percent as lower oil prices weighed on Russia. Indonesian shares slumped on concern a new parliamentary speaker will hurt President-elect Joko Widodo’s growth plans.
OAO Gazprom, the world’s biggest natural gas producer, led the Micex Index to a seven-week low as Brent crude sank to the weakest close since June 2012. The Jakarta Composite Index tumbled 2.7 percent, with PT Astra International sliding 5.7 percent. Argentina’s Merval stock index plummeted after the resignation of the central bank’s head. The Ibovespa rose after plunging 7.6 percent in the past three days.
The MSCI Emerging Markets Index declined 0.4 percent to 992.53 in New York, after falling as much as 989.13 and entering a correction from a three-year high reached Sept. 3. The Standard & Poor’s 500 Index was little changed following a three-day slide, as the Federal Reserve held its course to end a bond-buying program. European shares tumbled on concern central-bank stimulus will fail to revive the economy.
“For now the negative drivers remain in place, so EM should continue to be under pressure,” Maarten-Jan Bakkum, an emerging-market strategist at ING Groep NV in The Hague, said by phone. “Oil weakness is the main reason for drops in Russian equities.”
The developing-nation gauge, which sank 7.6 percent in September, has fallen 1 percent in 2014 and trades at 10.6 times projected 12-month earnings, data compiled by Bloomberg show. The MSCI World Index has advanced 0.4 percent in the period and is valued at a multiple of 14.5.
The Micex dropped 1.7 percent in its second day of declines, as Gazprom and OAO Lukoil fell at least 1.5 percent. Russia receives about half its budget revenue from oil and natural gas. The International Monetary Fund yesterday cut its previous 2015 growth forecast in half to 0.5 percent.
The Market Vectors Russia ETF, the largest U.S. dedicated exchange-traded fund tracking the nation’s stocks, gained 0.6 percent, reversing an early drop. It is down 19 percent from a July high.
The ruble briefly weakened beyond 44.40 against the Bank of Russia’s basket of dollars and euros, the level at which the central bank said it would intervene, before rebounding 0.1 percent to 44.2991. President Vladimir Putin said his government doesn’t intend to impose measures to hinder capital movements from the nation. Brent, Europe’s benchmark, declined 0.8 percent on the London-based ICE Futures Europe exchange, sinking 20 percent from its peak in June.
The Ibovespa gained after posting its biggest three-day slump since 2011. Itau Unibanco Holding SA, Latin America’s biggest bank by market value, climbed 3.3 percent in Sao Paulo from the lowest level since July.
Argentine bond and stock markets deepened their losses after the resignation of Central Bank President Juan Carlos Fabrega dimmed the prospect of a second peso devaluation this year. The Merval stock index sank 7.1 percent, bringing to 15 percent its plunge since President Cristina Fernandez de Kirchner on Sept. 30 publicly criticized the bank for allegedly leaking inside information.
Shares in Budapest and Prague retreated at least 1.3 percent. OTP Bank Plc, down 3 percent, and Mol Nyrt, which slid 2.4 percent, led Hungarian equities lower. The country is working on setting up a “fair banking system” that will regulate consumer lending practices in the “strictest manner,” ruling Fidesz party parliamentary group leader Antal Rogan told reporters in Budapest. The PX Index fell for a second day, led by Erste Group Bank and CEZ AS.
Setya Novanto, a lawmaker from the opposition Golkar Party, was chosen as speaker for the lower house of the Indonesian parliament. Parties opposed to Widodo may make it more difficult for the former Jakarta governor to push through plans to boost growth. PT Astra was the biggest drag on the Jakarta Composite. The rupiah weakened 0.2 percent.
Markets in Hong Kong and mainland China are closed for the National Day holiday.
The premium investors demand to own emerging-market debt over U.S. Treasuries narrowed three basis point to 302, JPMorgan Chase & Co. indexes show.
Nine out of 10 industry groups in the emerging-markets measure fell, led by consumer-discretionary shares. Hyundai Motor, South Korea’s largest automaker, sank to the lowest level since August 2011.