Emerging-Market Stocks Post Longest Streak of Losses in a MonthNatasha Doff and Harry Suhartono
Emerging-market stocks fell for a fourth day, the longest losing streak in a month, led by energy and utility companies, as the European Central Bank kept its main interest rate unchanged.
The Ibovespa retreated 2 percent as Brazil’s central bank signaled that it will keep raising interest rates to tame inflation. Nigerian stocks fell for an 11th day on speculation the naira will be devalued. Equities in Taiwan slipped 0.8 percent. Computer services company SK C&C Co. sank the most since April 2012 in Seoul as sales trailed estimates. Russia’s ruble declined the most in six years after the central bank scaled back interventions.
The MSCI Emerging Markets Index lost 0.7 percent to 991.32 in its fourth straight decline. The ECB kept interest rates unchanged at record lows as investors wait for signs from President Mario Draghi on whether he’ll push for more stimulus for the euro area.
“The ECB is too constrained to take any real action that would take the place of the U.S. as the engine of capital flows to emerging markets,” Per Hammarlund, the chief emerging-markets strategist at Skandinaviska Enskilda Banken AB, said by phone before the decision. “The Russian Central bank is generally happy letting the ruble depreciate, but they’re letting it happen way too fast.”
The MSCI developing-nation gauge has lost 1.1 percent this year and trades at 10.8 times projected 12-month earnings, data compiled by Bloomberg show. The MSCI World Index has gained 2.8 percent in the period and is valued at a multiple of 15.1.
Nine out of 10 industry groups fell today. Huaneng Power International Inc. sank 4.9 percent in Hong Kong after announcing a private share sale below market prices, while SK C&C tumbled 6.9 percent.
The Ibovespa fell the most among major equity gauges. Brazil’s central bank said in minutes published today that it will remain vigilant regarding inflation after policy makers lifted the target lending rate on Oct. 29 to 11.25 percent from 11 percent. Lender Itau Unibanco Holding SA led the decline in the benchmark index, tumbling 3.6 percent.
The ruble, the worse performing currency in the world this year, lost 4.1 percent versus the dollar today. Traders are trying to determine how far the currency will have to fall before the Bank of Russia steps in with a large intervention to shore it up.
The Micex Index rose 0.2 percent, paring a gain of as much as 1.7 percent after government officials in Kiev and pro-Russian rebels in eastern Ukraine accused each other of starting major offensives in the region. The two sides agreed to a cease-fire two months ago.
Taiwan’s Taiex Index decreased 0.8 percent, paced by a decline in Hon Hai Precision Industry Co. Equity gauges in Indonesia and Malaysia slid at least 0.4 percent.
The Nigerian Stock Exchange All Share Index declined 4.1 percent to the lowest since April 2013. Africa’s biggest economy has run foreign-exchange reserves to a three-month low in a bid to defend the currency before elections in February.
“Foreign investors are exiting the market,” Pabina Yinkere, head of research at Lagos-based Vetiva Capital Management Ltd., said by phone. “They don’t want to be stuck in Nigeria when the naira will be devalued. The fall in the oil price has given a challenging outlook to the economy.”
The premium investors demand to own developing-country debt over U.S. Treasuries narrowed two basis points to 299 basis points, according to JPMorgan Chase & Co. indexes.
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