Emerging Stocks Decline to Seven-Week Low as Currencies WeakenZahra Hankir and Harry Suhartono
Emerging-market stocks retreated to a seven-week low and Russia’s ruble led currencies lower as oil extended a rout and speculation mounted that U.S. interest rates will soon rise.
Russian bond yields rose on bets the central bank will increase interest rates this week. The ruble retreated 2.3 percent. The rand fell to a six-year low as South Africa’s current-account gap narrowed less than economists forecast. Infosys Ltd. plunged 4.8 percent in Mumbai after its founders sold shares. Dubai’s DFM General Index dropped 3.3 percent. The Shanghai Composite Index rise for the 12th time in 13 sessions.
The MSCI Emerging Markets Index dropped 0.9 percent to 976.84. A Bloomberg index tracking 20 key exchange rates slid 0.3 percent, its 10th straight decline. Investors are switching to U.S. securities as growth in the world’s largest economy picks up relative to other major economies, according to PT MNC Asset Management. Data on Dec. 5 showed employers in the country added 321,000 jobs in November, the most since January 2012.
Emerging-market currencies “are losing ground against the dollar amid much stronger than expected U.S. payrolls data on Friday,” Bernd Berg, a London-based strategist at Societe Generale SA, said by e-mail. “In Russia local markets are in panic mode. The focus is now on the 11 December central bank policy rate decision.”
The ruble resumed its decline after rebounding 3.4 percent on Dec. 5. Russia has spent about $74 billion on interventions in a failed attempt to stem the slide, which saw the currency plunge to a record versus the dollar on Dec. 3.
The Bank of Russia will raise the benchmark rate from 9.5 percent on Dec. 11, according to the median of 24 estimates on Bloomberg, adding to this year’s 400 basis points of increases.
The Micex Index decreased 3.1 percent. Equity markets in Turkey and Poland retreated at least 0.3 percent.
The Ibovespa fell 3.3 percent as steelmaker Cia. Siderurgica Nacional SA declines among commodity producers after a report showed November imports unexpectedly decreased in China, Brazil’s top trading partner. The real lost 0.5 percent versus the dollar.
The lira depreciated for a second day, losing 0.3 percent versus the dollar. Turkish industrial output growth missed forecasts for the third month in October, data today showed.
South Africa’s currency weakened 1.6 percent against the dollar. The nation’s shortfall was 6 percent of gross domestic product in the third quarter, compared with a revised 6.3 percent in the prior three months and a 5.8 percent median estimate of 16 economists in a Bloomberg survey.
Dubai’s benchmark index entered its second bear market since May after oil slumped and Emaar traded without the right to its dividend.
MSCI’s emerging-market gauge has lost 2.6 percent this year and trades at 11.1 times 12-month projected earnings, according to data compiled by Bloomberg. The MSCI World Index of developed nations has gained 3.9 percent and is valued at 15.5 times earnings. All industry groups fell on the MSCI’s developing-market measure today, led by energy shares.
An index of technology shares slid 0.7 percent. Infosys posted its biggest loss since May. Four founders sold about 65 billion rupees ($1 billion) of stock, according to an e-mailed statement today.
China’s stocks rose as optimism that they will extend their world-beating rally outweighed disappointing trade data. The Shanghai Composite Index surpassed 3,000 for the first time since 2011.
Citic Securities Co. and Haitong Securities Co. soared at least 10 percent as China’s CSI 300 Index surged 4.1 percent in a 12th day of gains. The Hang Seng China Enterprises Index rose 2.35 percent.
India’s S&P BSE Sensex Index slid 1.2 percent. In the Philippines, government offices were shut while trading of stocks, bonds and currencies was suspended for the day as tropical storm Hagupit approached Manila.
The premium investors demand to own emerging-market debt increased eight basis points to 324 basis points, JPMorgan Chase & Co. Indexes show.