Emerging Stocks Post Biggest Weekly Drop of 2015 as Fed WeighsLyubov Pronina
Emerging-market stocks posted the biggest weekly retreat of the year as investors weighed the timing of U.S. interest-rate increases.
United Co. Rusal fell to the lowest in 2015, driving a slide in the dollar-denominated RTS Index of Russian stocks. The ruble fell 1.7 percent today as the central bank cut interest rates. Indian equities dropped as some investors saw recent gains as excessive. The Ibovespa fell for a second day amid union protests in Brazil. A gauge of developing-nation currencies slid to a record on speculation that higher U.S. rates will encourage investors to sell developing-nation assets.
The MSCI Emerging Markets Index slipped 0.9 percent to 939.56 in New York, extending its decline this week to 3.3 percent, as investors await a Federal Reserve meeting next week that may offer clues on the timing of rate increases. The benchmark measure has retreated 1.8 percent this year. U.S. oil futures capped their biggest weekly slump since December as inventories grew.
“As tension builds up before the first Fed rate hike, we may see further volatility,” William Jackson, a London-based economist at Capital Economics Ltd., said by phone. “Commodity prices will remain low. So large emerging-market commodity-exporting economies are likely to perform poorly.”
Russian central-bank Governor Elvira Nabiullina lowered the benchmark interest rate to 14 percent from 15 percent, as projected by the median forecast in a poll of 32 analysts by Bloomberg. The ruble weakened to 62.2490 per dollar. United Co. Rusal slid 3.4 percent, pushing its weekly decline to 12 percent.
India’s S&P BSE Sensex index dropped 1.5 percent, extending its loss for the week to 3.2 percent, the most this year. The gauge trades at 16 times the projected earnings of its members, compared with a five-year average of 14.4. The rupee declined 0.7 percent.
The Ibovespa declined 0.6 percent as labor unions started protests in some cities while other groups planned to demonstrate Sunday against corruption and growing economic hardship as they call for the impeachment of President Dilma Rousseff.
Petroleo Brasileiro SA extended its weekly drop to 10 percent as a decline in crude dimmed the prospects for its offshore investments and after a newspaper reported the oil producer is in talks with creditors to extend a deadline for publishing audited results. West Texas Intermediate for April delivery slid 9.6 percent this week in New York.
South Africa’s Aspen Pharmacare Holdings Ltd. tumbled 4.4 percent to the lowest price this year after GlaxoSmithKline Plc sold part of its stake at a discount. Lenovo dropped 4.2 percent, the most since Nov. 7, after Intel Corp. lowered its sales guidance.
China’s yuan weakened in offshore trading amid speculation that the nation’s central bank will widen the currency’s trading band. The Shanghai Composite Index rose 0.7 percent to the highest closing level since Jan. 26.
All 10 industry groups in the developing-nation gauge slid this week, led by energy companies. The measure trades at 11.5 times projected 12-month earnings compared with 16.4 times for the MSCI World Index of developed-nation stocks, data compiled by Bloomberg show.
The premium investors demand to hold emerging-market debt over U.S. Treasuries increased two basis points to 366 basis points, according to JPMorgan Chase & Co. indexes.