Emerging-Market Stocks Decline as Ibovespa Sinks on Rousseff WinNatasha Doff and Harry Suhartono
Emerging-market stocks fell as the Ibovespa tumbled to a six-month low and Brazil’s real slid after President Dilma Rousseff won elections. The Shanghai Composite Index posted its longest streak of losses this year.
The Ibovespa dropped the most among the world’s biggest stock benchmarks and the real led declines in developing-nation currencies. The Shanghai Composite decreased for a fifth day. The Micex Index rose 1 percent and the ruble lost 0.8 percent versus the dollar as Russian interventions neared $20 billion. Ukrainian stocks gained as elections showed pro-European parties poised to control parliament.
The MSCI Emerging Markets Index fell 1 percent to 1,394.27. Rousseff won Brazil’s top job, against Senator Aecio Neves, by the tightest margin since at least 1945, damping bets for a change in policies that left the economy in recession. The iShares MSCI Brazil Capped Exchange-Traded Fund dropped 5.5 percent to $39.33.
“Opinion polls were very close so there were expectations that Mr. Neves could win and turn things around,” Simon Quijano-Evans, London-based head of Commerzbank’s emerging-market research, said by e-mail. “The onus is now clearly on Mrs. Rousseff as ratings agencies will be watching closely for any new reform package that could help place the country on a growth path.”
The Ibovespa had rallied from this year’s low in March amid bets that the incumbent would be ousted by Neves. It dipped more than 20 percent below its Sept. 2 bull-market high in intraday trading today.
A gauge tracking 20 emerging-market currencies weakened 0.2 percent as the real depreciated to 2.5211 per dollar. The premium investors demand to own developing-nation debt over U.S. Treasuries was little changed at 308 basis points, according to JPMorgan Chase & Co. Indexes. Nine out of 10 industry groups in the MSCI Emerging Markets Index dropped, led by energy and utility companies.
Petroleo Brasileiro SA, Brazil’s state-run oil company, lost 12 percent in Sao Paulo. Indexes in Dubai and Vietnam retreated at least 1.4 percent, while Turkish shares fell 0.2 percent. Ocean Group JSC decreased 6.4 percent after Vietnamese police arrested its chairman Ha Van Tham for violation of rules on lending activities of credit institutions.
The Micex climbed for a second day after Standard & Poor’s affirmed Russia’s investment-grade credit rating on Oct. 24. The ruble depreciated to 42.24 per dollar. Central bank interventions failed to stem the depreciation amid concern Russia will toughen its stance over Ukraine after pro-European Union parties dominated in weekend elections.
Ukrainian President Petro Poroshenko’s bloc and Prime Minister Arseniy Yatsenyuk’s People’s Front, which plan to team up with other groups that back firmer ties with Europe, got 23.1 percent and 21.2 percent of votes for party lists in Ukraine’s parliamentary elections.
The UX Index advanced 1 percent in Kiev. The Czech gauge rallied 1.6 percent and the FTSE/JSE Africa All Share Index increased 0.4 percent in Johannesburg.
Samsung Engineering Co. jumped 7.7 percent after shareholders approved a merger with Samsung Heavy Industries Co.
The MSCI Emerging Markets Index has fallen 2.5 percent this year and trades at 10.5 times 12-month projected earnings, data compiled by Bloomberg show. The MSCI World Index, which trades at a multiple of 14.6, climbed 0.4 percent in the period.
The Shanghai Composite lost 0.5 percent. Citic Securities Co. and Haitong Securities Co., the nation’s biggest-listed brokerages, dropped at least 2.8 percent. The Hang Seng China Enterprises Index of mainland companies listed in Hong Kong declined the most since Oct. 16.
Charles Li, the chief executive officer of Hong Kong Exchanges & Clearing Ltd., said he had no idea when authorities will give the green light to proceed on a link between Chinese and Hong Kong exchanges weighed on shares.
“The delay in the Chinese trading link was a surprise and goes against market expectation,” Akbar Syarief, a money manager at PT MNC Asset Management, said by phone in Jakarta.