Most Emerging Stocks Drop on China Growth Concern, Oil Decline

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Most emerging-market stocks fell as concern grew that policy easing is failing to revive growth in China and energy companies slid as oil retreated for a second day.

Cnooc Ltd. slid 2.4 percent in Hong Kong as a gauge of developing-nation energy shares dropped the most in a week. Stocks in Mumbai retreated after wholesale prices in India fell more than forecast. Banco Bradesco SA jumped the most in six weeks in Sao Paulo, leading a 0.5 percent gain in the Ibovespa. The ruble fell 1.7 percent versus the dollar as the Bank of Russia buying foreign currency for the first time since switching to a free float in November.

The MSCI Emerging Markets Index gained less than 0.2 percent to 1,035.80 with 415 stocks lower and 348 higher. Oil slumped after U.S. refineries reduced their crude use by the most in four months. Chinese factory output to retail sales and new lending all trailed estimates, according to figures released this week. U.S. wholesale prices unexpectedly dropped in April from the prior month as retail sales stagnated, data showed.

“The weaker U.S. retail sales numbers are of concern and continued softness in the Chinese economic data troubles the market,” Tony Hann, the head of emerging markets at Blackfriars Asset Management Ltd. in London, said by e-mail. “U.S. retail sales affect exporters from emerging markets.”

The developing-country measure has risen 8.3 percent this year and trades at 12.4 times projected 12-month earnings, data compiled by Bloomberg show. The MSCI World Index of advanced-nation equities has gained 5.5 percent in 2015 and is valued at a multiple of 16.8.

Brazil, India

A measure of emerging-market energy stocks slid for the third time this week, retreating 0.9 percent. Cnooc Ltd., China’s biggest offshore oil and gas explorer, dropped 2.4 percent in Hong Kong.

The Ibovespa advanced for the first time in three days. Banco Bradesco jumped 2.4 percent, contributing the most to the Brazilian benchmark’s gain. Petroleo Brasileiro SA, the state-run oil producer, slipped 0.6 percent. The company is scheduled to report its first-quarter earnings after the close of trading Friday.

The ruble depreciated for the first time in three days as Russia’s central bank sought to replenish international reserves decimated by its defense of the domestic currency last year. The Micex index slipped 0.3 percent. Equities in the Czech Republic, Hungary and Poland each dropped at least 0.7 percent.

Currencies Rally

A gauge tracking 20 emerging-market currencies rose for a third day, gaining 0.6 percent to the highest level since mid-January. Seven of the 10 industry groups in the developing-nation equity gauge jumped as foodmaker Uni-President Enterprises Corp. added 1.3 percent in Taipei, leading consumer staples stocks higher.

“There’s a tailwind for emerging markets that comes from the slumping dollar,” Paul Christopher, the Chief International Investment Strategist at Wells Fargo Investment Institute, said by phone. “Despite all the concerns about slowing growth, there’s still some leftover momentum in China in light of the recent announcement of the cut in the interest rate. That’s outweighing the decline in oil prices we’re seeing today, which dragged on oil exporters like Russia.”

India’s S&P BSE Sensex index fell 0.2 percent as investors weighed the central bank’s next decision on interest rates after the report on wholesale prices. Taiwan’s Taiex index retreated 1.2 percent, halting a two-day increase.

Yield Spread

The Shanghai Composite Index rose 0.1 percent, while the Hang Seng China Enterprises gauge dropped 0.6 percent. Central bank data released after the close Wednesday showed new yuan loans plunged to 707.9 billion yuan in April, compared with the estimate for 903 billion yuan. M2 money supply growth rose 10.1 percent, also missing estimates.

Qatar’s QE Index climbed 1.2 percent. Ezdan Holding Group and Qatar Insurance Co. jumped at least 7.4 percent, extending gains from Wednesday after MSCI Inc. said the shares will be included in the MSCI Qatar Index at the close of May 29.

The premium investors demand to own emerging-market debt over U.S. Treasuries increased five basis points to 331 basis points, according to JPMorgan Chase & Co. indexes.