Emerging-Market Stocks Decline Second Day as Exporters Retreat

Emerging-market stocks fell, led by exporters, while oil’s retreat weighed on Saudi Arabian shares. Volatility in the Ibovespa surged to a three-year high after a surprise drop in Brazil’s industrial production.

Chemicals manufacturer LG Chem Ltd. sank to a five-year low in Seoul. Etihad Etisalat Co. slid 10 percent in Riyadh as earnings missed estimates. Stocks in oil producing countries Saudi Arabia and Nigeria retreated as crude fell to a three-year low. Ukrainian bonds declined as elections held by rebels threatened to undermine a cease-fire.

The MSCI Emerging Markets Index lost 0.3 percent to 1,007.11. Brazil’s industrial output fell 0.2 percent in September from a month earlier, compared with a median forecast in a Bloomberg survey for a 0.2 percent increase. That added to concern that President Dilma Rousseff will struggle to revive Latin America’s biggest economy.

“The market is skeptical about Dilma’s intentions to push through required reforms to lift the country growth prospects,” Ivo Luiten, a senior money manager who helps oversee $1.2 billion of emerging-market equities at ING Investment Management in the Hague, said by e-mail.

Brazil’s real fell as much as 1.5 percent before closing little changed at 2.4956 per dollar. The Ibovespa rose 0.8 percent after an earlier decline of as much as 1 percent. The stock benchmark’s 30-day historical volatility jumped to 44.5 percent, the highest level since September 2011.

Lender Itau Unibanco Holding SA contributed the most to the Ibovespa’s gain, rallying 1.9 percent after reporting quarterly profit that exceeded analysts’ estimates. Vale SA, the world’s largest iron-ore producer, dropped 3.2 percent.

Samsung, Hyundai

Seven of the 10 industry groups in the developing-nation equity gauge fell, led by materials and energy companies. LG Chem sank 5.8 percent, while Samsung Electronics, the world’s largest maker of smartphones, dropped for a second day. Hyundai Motor Co. declined 3.1 percent.

The Kospi index fell 0.9 percent, the most in two weeks, on concern the won’s gain to a six-year high versus the yen will erode the competitiveness of South Korean exporters. The won has strengthened 6.2 percent versus the yen in the past three months, according to data compiled by Bloomberg.

“Much of the Korean market is export driven and we see clearly that the export sector is under severe pressure over the past few weeks as many of their companies compete directly with Japanese exporters,” Nathan Griffiths, who helps manage $1.2 billion of emerging-market equities at ING Investment Management in the Hague, said by e-mail.

Oil Producers

West Texas Intermediate crude dropped to a three-year low as Saudi Arabia cut prices for exports to the U.S. amid speculation stockpiles increased last week. Brent fell to a four-year low in London.

In Saudi Arabia, the largest exporter in the Organization of Petroleum Exporting Countries, stocks slid 3.5 percent, the biggest retreat among gauges worldwide today. Etihad Etisalat, known as Mobily, fell the most since October 2008. The company reported third-quarter profit plunged more than 70 percent, missing the average of seven analyst estimates. The stock gauge in Nigeria, Africa’s largest crude producer, lost 1.6 percent.

The yield on Ukrainian 2017 Eurobonds increased 93 basis points to 15 percent, rising for a second day. Calling the Nov. 2 ballots in the regions of Donetsk and Luhansk a “farce that jeopardizes the entire peace process,” Ukrainian President Petro Poroshenko said the government will never recognize their results, according to a statement yesterday.

Relative Value

The premium investors demand to own developing-nation debt over U.S. Treasuries widened three basis points to 298 basis points, according to JPMorgan Chase & Co. indexes.

The MSCI Emerging Markets Index has risen 0.4 percent this year and trades at 11 times projected 12-month earnings, compared with a multiple of 15 for the MSCI World Index, which is up 2.2 percent in 2014, data compiled by Bloomberg show.

China Communications Construction Co. rose 9 percent in Hong Kong. China plans a fund to finance construction of infrastructure linking domestic and overseas markets, with government officials familiar with the matter saying money will be used to build and expand railways, roads and pipelines in provinces as part of the strategy to facilitate trade over land and shipping routes.

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