Bloomberg News

Emerging Stocks Tumble to 2-Month Low on Slowdown Concern

March 29, 2012

Emerging-market stocks fell to a two-month low as U.S. jobless claims exceeded economists’ estimates and Chinese earnings missed forecasts.

The MSCI Emerging Markets Index (MXEF) declined 1.1 percent to 1,032.60 at the close in New York, the lowest since Feb. 1. Information technology and energy companies led declines.

Banco do Brasil SA, Latin America’s biggest bank by assets, slumped to a seven-week low. Unipetrol AS (UNIP), the biggest Czech oil refiner, had the biggest slide since Feb. 9 as the company reported an audited 2011 loss that was more than double an earlier figure. Sany Heavy Industry Co. (600031), the biggest Chinese machinery maker, fell the most in more than three months after net income missed some analysts’ estimates.

U.S. jobless claims fell to 359,000 in the week ended March 24, exceeding the median prediction of economists in a Bloomberg survey, Labor Department data released today showed. Company earnings increased 0.9 percent in the last three months of 2011 compared with the third quarter, the smallest advance since the fourth quarter of 2008, according to Commerce Department data. Societe Generale SA said Chinese corporate profits won’t grow this year in a March 27 note.

“Jobless claims were above expectations, which was disappointing,” Daniel Lenz, chief emerging-market strategist at DZ Bank AG in Frankfurt, said by phone. “For a couple days now, because of mixed macro numbers, people are more eager for taking profits after the very strong gains we had seen.”

Lower Valuation

The MSCI Emerging Markets Index’s 13 percent gain this year has outpaced the MSCI World Index (MXWO) of developed nations, which is up 10 percent. The gauge of developing countries is valued at 10.7 times estimated profit, compared with the MSCI World’s estimated earnings multiple of 13 times.

The IShares MSCI Emerging Markets Index exchange-traded fund (EEM:US), the most-traded ETF that tracks developing-nation shares, lost 0.1 percent to $42.64. The Chicago Board Options Exchange Emerging Markets ETF Volatility Index (VXEEM), a gauge of options prices on the fund and expectations of price swings, fell 1.3 percent to 26.57.

Brazil’s Bovespa (IBOV) closed at the lowest level since Feb. 10, extending its streak of losses to a third day with a 0.3 percent decline. Banco do Brasil SA lost 2.1 percent on concern the global financial system may be hurt by a worsening credit crisis in Europe after Standard & Poor’s said Greece may have to restructure its debt again.

Lawsuit Against MTN

MTN Group Ltd. (MTN), Africa’s largest wireless operator, dropped 1.5 percent after Turkcell Iletisim Hizmetleri AS filed a lawsuit alleging that MTN bribed officials, arranged meetings for Iran with South African leaders, and promised Iran weapons and United Nations votes in exchange for a license to provide cell-phone services in the Islamic Republic.

Czech stocks decreased to a two-month low, sliding 1.8 percent. In Poland, the Wig 20 Index declined 1.6 percent.

Russia’s Micex Index (MICEX) slumped 1.7 percent, led by a 6.1 percent decline in OAO Mechel (MTLR). Mechel (MTLR), Russia’s biggest miner of steelmaking coal, plunged to its lowest close this year after saying that the company started talks with lenders to obtain waivers and amendments to loans on the expectation falling prices cause it to breach financial covenants.

Renhe Commercial Holdings Co. (1387) sank 22 percent to a record low in Hong Kong, the worst performer on the MSCI Emerging Markets Index. Moody’s Investors Service cut the shopping-mall developer’s credit rating two levels to B3, six ranks below investment grade. The stock tumbled 20 percent yesterday after underlying profit dropped more than 90 percent.

China Shipping Loss

China Shipping Container Lines Co. (2866), the nation’s second- biggest container carrier, declined 2 percent in Hong Kong trading, after reporting a wider-than-estimated loss in 2011. The Hang Seng China Enterprises Index of mainland stocks in Hong Kong fell 1.6 percent to the lowest level in more than two months.

Sany Heavy Industry slid 4.1 percent after saying net income rose 54 percent to 8.65 billion yuan ($1.4 billion) last year, below the 9 billion-yuan average estimate of 16 analysts surveyed by Bloomberg.

Most emerging-market currencies weakened against the dollar, with the Indian rupee slumping 1.2 percent.

The extra yield investors demand to own emerging-market debt over U.S. Treasuries rose three basis points, or 0.03 percentage point, to 343 basis points, according to JPMorgan Chase & Co.’s EMBI Global Index.

To contact the reporters on this story: Zachary Tracer in New York at ztracer1@bloomberg.net; Stephen Gunnion in Johannesburg at sgunnion@bloomberg.net

To contact the editors responsible for this story: Emma O’Brien at eobrien6@bloomberg.net; Gavin Serkin at gserkin@bloomberg.net


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Companies Mentioned

  • EEM
    (iShares MSCI Emerging Markets ETF)
    • $42.01 USD
    • 0.38
    • 0.9%
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