Bloomberg News

Emerging-Market Stocks Drop Amid Europe Debt Cris Worries

April 16, 2012

Emerging-market stocks fell for the first time in four days as concern that Europe’s debt crisis is worsening dimmed the outlook for global growth, offsetting an increase in U.S. retail sales that was larger than forecast.

The MSCI Emerging Markets Index (MXEF) dropped 0.6 percent to 1,020.00 at the close in New York, led by materials producers. YPF SA (YPFD) fell 2.4 percent before trading was halted, after Argentina said it plans to seize 51 percent of the oil producer. The American depositary receipts (YPF:US) plunged 11 percent before trading was stopped. Vale SA (VALE5), the world’s largest iron ore producer, lost 1.7 percent, dragging Brazil’s Bovespa to a second day of losses.

Yields on Spain’s 10-year bonds climbed above 6 percent. South Korea’s economy will expand 3.5 percent in 2012, as a global slowdown limits exports, the country’s central bank said today. That compares with a 3.7 percent forecast in December. U.S. retail sales rose 0.8 percent in March, exceeding the median forecast for a 0.3 percent rise in a Bloomberg survey of 81 economists.

“There are doubts whether the Spanish government will be successful in installing all the required fiscal austerity measures that will be needed to inspire a turnaround,” Daniel Lenz, chief emerging-market strategist at DZ Bank AG in Frankfurt, said by phone. U.S. retail sales were “definitely a good thing, but the picture is not clear enough to be sure that the recovery in the U.S. will be strong and lasting.”

2012 Gain

The MSCI Emerging Markets Index climbed 11 percent this year, beating the 7.1 percent advance in the MSCI World (MXWO) Index of developed nations. The gauge of developing nations is valued at 10.4 times estimated profit, compared with the MSCI World’s multiple of 12.3 times.

The IShares MSCI Emerging Markets Index exchange-traded fund (EEM:US), the most-traded ETF to track developing-nation shares, slid 0.5 percent to $41.95 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 0.1 percent to 28.67.

Mexican stock exchange officials canceled a series of erroneous trades by Bulltick Capital Markets that set off a plunge in the nation’s benchmark index during trading on April 13. The benchmark IPC index fell 0.2 percent today.

Brazil’s Bovespa lost 0.2 percent, sliding for a second day. Vale fell as metal prices slumped to a three-month low.

Russia’s Micex (MICEX) declined 1.7 percent, as OAO Severstal (CHMF) slid 3.3 percent to the lowest since Dec. 30, based on closing prices.

Turkey’s ISE National 100 Index (XU100) fell 0.2 percent. Celebi Hava Servisi AS (CLEBI), an airport ground services operator, lost 4.1 percent after full-year profit plunged 60 percent, missing all 10 estimates compiled by Bloomberg.

Samsung Electronics Co. (005930) retreated for a fifth day, its longest losing streak in eight months, as South Korea’s Kospi Index (KOSPI) slid 0.8 percent after the Bank of Korea lowered its growth forecast.

Chinese Currency

China’s Shanghai Composite Index fell less than 0.1 percent while the Hang Seng China Enterprises Index (HSCEI) of mainland stocks in Hong Kong lost 0.8 percent.

The People’s Bank of China on April 14 expanded the range the managed yuan is allowed to trade within against the dollar for the first time since 2007. The band was widened to 1 percent from 0.5 percent and takes effect today. The currency weakened against the dollar by 0.2 percent to 6.3153.

“There seems to be a conviction among policy makers that the current level of the yuan is at an equilibrium, that the path of multi-year appreciation has either come to a stop or is slowing down,” Amer Bisat, a money manager at hedge fund Traxis Partners LP in New York and former senior economist at the International Monetary Fund, said in an interview. “The currency is probably fairly valued.”

The extra yield investors demand to own emerging-market debt over U.S. Treasuries was little changed at 361, 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; Jason Webb in London at jwebb25@bloomberg.net. Stephen Gunnion at sgunnion@bloomberg.net.

To contact the editor responsible for this story: Darren Boey at dboey@bloomberg.net


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Companies Mentioned

  • YPF
    (YPF SA)
    • $35.27 USD
    • 0.53
    • 1.5%
  • EEM
    (iShares MSCI Emerging Markets ETF)
    • $41.82 USD
    • -0.27
    • -0.65%
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