Emerging-Market Stocks Slump Ninth Day as Greek Debt Talks StallLyubov Pronina and Choong En Han
Emerging-market stocks retreated for a ninth day as Greece’s talks with creditors stalled and concern mounted that strengthening economies in developed nations will damp demand for riskier assets.
The MSCI Emerging Markets Index fell 0.8 percent to 988.05, posting the longest streak of declines since March. Turkish stocks ended a two-day gain before Sunday’s general elections. Taiwan’s benchmark slid to the lowest since January as foreign investors became net sellers. Five-year Russian bond yields rose to the highest level since April. A Bloomberg gauge of developing-nation currencies dropped 0.3 percent.
Greece deferred a payment to the International Monetary Fund as top-level talks failed to end an impasse with creditors. Prime Minister Alexis Tsipras plans to address parliament on Friday. European Central Bank President Mario Draghi on Wednesday forecast higher inflation and market volatility. The U.S. economy expanded in the past two months, rebounding from a drop in the first quarter, a Federal Reserve report showed.
“Uncertainty about the Greek negotiations is keeping risk assets under pressure,” Michael Wang, a London-based strategist at Amiya Capital LLP, said by e-mail. “The better inflation data in Europe and the largely better economic data in the U.S. are also helping to push bond yields up.”
Four of 12 Fed districts reported “moderate” growth, and three described their expansion as “modest,” according to the Beige Book released Wednesday in Washington. The report offers central-bank officials, who next meet June 16-17, anecdotal evidence about the state of the economy as they consider when to raise interest rates for the first time since 2006.
All 10 industry groups in the MSCI gauge fell Thursday, led by energy companies, as oil slumped for a second day. The developing-nation index trades at 12 times the projected earnings of its members, compared with a multiple of 16.7 for the MSCI World Index of developed-nation stocks, according to data compiled by Bloomberg.
The Borsa Istanbul 100 Index dropped 1.1 percent, after posting the biggest two-day increase since March 17. Campaigning intensified in Turkey for Sunday’s parliamentary elections, which surveys have indicated would be the tightest race in a dozen years. The ruling AK party faces Peoples’ Democracy Party, which hopes to enter parliament for the first time and prevent President Recep Tayyip Erdogan’s lawmakers from winning a majority.
Taiwan’s Taiex Index slumped 2.2 percent to the lowest level since Jan. 21. Foreign investors sold a net $453 million of stocks in the first three days of the week. Hon Hai Precision Industry Co, the manufacturer for Apple Inc.’s iPhones, lost 2.6 percent.
Brazilian markets were closed for a holiday.
The ruble tumbled 3.8 percent to 56.46 per dollar, leading declines in currencies. The Bank of Russia said it would keep buying foreign exchange to build reserves, putting pressure on the ruble after the worst fighting in Ukraine in three months. The dollar-denominated RTS Index of Russian stocks slumped 2.6 percent to a two-month low.
The Shanghai Composite Index gained 0.8 percent. The gauge had earlier fallen as much as 5.4 percent on news that a brokerage has suspended margin financing for investors in smaller companies. The Hang Seng China Enterprises Index of mainland shares in Hong Kong increased 0.1 percent after dropping as much as 2.4 percent.
Record growth in margin debt has helped add more than $4 trillion to the value of mainland Chinese shares this year. The rally has raised concern among some investors that valuations are reaching excessive levels. Bill Gross wrote on Twitter Wednesday that shares on the technology-heavy Shenzhen bourse are the next big trade for short sellers.
Samsung SDS Co. tumbled 7.3 percent in Seoul, the most in nearly three months, after Samsung Electronics Co. said it has no plans for a merger.
The premium investors demand to hold emerging-market debt over U.S. Treasuries widened eight basis points to 337 basis points, according to JPMorgan Chase & Co. indexes.
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