Bloomberg News

Most Emerging Stocks Fall as Consumer, Industrial Shares Retreat

April 11, 2012

Most emerging-market stocks fell as declines in consumer and industrial companies outweighed speculation that the European Central Bank may act to ease Spain’s debt crisis.

The MSCI Emerging Markets Index (MXEF) was little changed at 1,016.21 at the close in New York, as 379 shares retreated and 261 advanced. Phone company Oi SA (OIBR4) tumbled 2.5 percent in Sao Paulo after Morgan Stanley said lower profit margins may lead it to cut dividends. Eletropaulo Metropolitana SA (ELPL4) dropped the most in eight months after Brazil’s energy regulator said the company may have to lower its tariffs this year. China Shipping Development Co. (1138) plunged the most in five months in Hong Kong after reporting a preliminary first-quarter loss.

Emerging-market stocks are retreating for a second month after reaching a seven-month high on March 2, amid concern that slowing economies in China and the U.S. and renewed worries over sovereign debt in Europe may derail global growth. The MSCI gauge of emerging markets has lost 2.4 percent this month after sliding 3.5 percent in March.

“It’s wait and see now for the next three to four months with sentiment driven by individual events like the French elections, like what happens with Spain,” Simon Quijano-Evans, chief emerging markets economist at ING Bank NV in London, said by phone. “It’s not going to be easy and it’s going to take some time” to resolve the euro zone debt crisis.

Spain Debt

Emerging-market stocks trimmed earlier losses of as much as 0.4 percent as ECB Executive Board Member Benoit Coeure triggered speculation the bank will revive its bond purchase program to lower Spain’s borrowing costs at an event in Paris today. Spanish “market conditions are not justified,” he said. Spanish Prime Minister Mariano Rajoy pledged today he’ll press ahead with measures to overhaul the economy and cut spending.

The IShares MSCI Emerging Markets Index exchange-traded fund (EEM:US), the most-traded ETF to track developing-nation shares, rose 1.1 percent to $41.74 in New York. 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 3.4 percent to 29.28.

The Bovespa (IBOV) fell 0.7 percent for a third day of losses. Eletropaulo (ELPL4) slumped 4.4 percent to the lowest since Dec. 22, as Brazil’s energy regulator proposed that it lower tariffs.

Alfa SAB (ALFAA), Mexico’s largest publicly traded producer of petrochemicals and processed meats, gained 3.4 percent after saying preliminary first-quarter sales increased 8.9 percent from a year earlier.

Earthquake

The Hang Seng China Enterprises Index (HSCEI) of mainland stocks in Hong Kong lost 0.9 percent. China Shipping shed 7.6 percent.

Thai stocks slumped as northwestern Indonesia was hit by an earthquake that prompted tsunami warnings across parts of Asia. The warnings were later canceled. Thailand’s SET Index (SET) fell 1 percent, while Indonesia’s Jakarta Composite Index (JCI) slid 0.5 percent. The quake came shortly before the close of trading in Jakarta.

South Korean markets were closed for election day. The IShares MSCI South Korea Index Fund (EWY:US), a U.S. exchange-traded fund that holds stocks from South Korea, gained 1.3 percent.

South Korea’s ruling party retained control of parliament in the election.

The extra yield investors demand to own emerging-market debt over U.S. Treasuries declined eight basis points, or 0.08 percentage point, to 359, according to JPMorgan Chase & Co.’s EMBI Global Index.

To contact the reporter on this story: Zachary Tracer in New York at ztracer1@bloomberg.net

To contact the editor responsible for this story: Emma O’Brien at eobrien6@bloomberg.net


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Companies Mentioned

  • EEM
    (iShares MSCI Emerging Markets ETF)
    • $43.82 USD
    • -0.78
    • -1.78%
  • EWY
    (iShares MSCI South Korea Capped ETF)
    • $66.1 USD
    • -1.26
    • -1.91%
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