Emerging-market stocks fell for a fifth day, erasing earlier gains, as Chinese imports rose less than expected, damping prospects that a rebound in the world’s second-largest economy could strengthen demand for commodities.
The MSCI Emerging Markets Index (MXEF) dropped 0.2 percent to 934.25 in New York after rising as much as 0.5 percent. Brazil’s Bovespa index fell 3 percent as state-controlled oil company Petroleo Brasileiro SA (PETR4) tumbled on lower crude prices. Brazilian steelmaker Usinas Siderurgicas de Minas Gerais SA fell the most since November and ZTE Corp. (000063), China’s second-biggest maker of telecommunications equipment, retreated to a three-year low in Hong Kong.
Chinese inbound shipments increased 6.3 percent in June from a year earlier, the customs bureau said today in Beijing, short of the 11 percent median estimate among 32 economists surveyed by Bloomberg. Chinese export growth slowed to 11.3 percent from 15.3 percent in May. Commodities, led by crude, fell amid concern that interest rate cuts by central banks from China to Europe won’t be sufficient to ignite global growth.
“The markets are extremely concerned about the second half of the year in terms of growth for China,” Gabriel Wallach, chief investment officer at Fortis Investments, said in a phone interview from Boston. “There has been a lot of easing but no one believes it’s enough. Those concerns have been a big part of Brazil’s drop because they need good growth out of China for their resource stocks.”
The 21 countries in the MSCI index send about 30 percent of their exports to the European Union on average, data compiled by the World Trade Organization show.
The developing-nation gauge trades at 10.1 times estimated earnings, compared with 12.1 times for the MSCI World Index of developed nations, according to data compiled by Bloomberg.
The IShares MSCI Emerging Markets Index exchange-traded fund, the ETF (EEM:US) tracking developing-nation shares, dropped for a fourth day, falling 1.1 percent to $38.20.
The Chicago Board Options Exchange Emerging Markets ETF Volatility Index (VXEEM), a measure of options prices on the fund and expectations of price swings, increased 2.1 percent to 27.89.
Petrobras lost 4.2 percent, the most in two weeks, and Usiminas slumped 6.2 percent, the most since Nov. 29. PDG Realty SA Empreendimentos & Participacoes, Brazil’s biggest homebuilder, tumbled 10 percent after reporting an 80 percent drop in new projects.
Russia’s Micex Index advanced for a second day, led by a surge of 6 percent for Federal Grid, the high-voltage power transmission monopoly. OAO Raspadskaya jumped 4 percent to the highest since May 5 after Deutsche Bank AG raised the Russian coal producer to buy from hold, citing stronger price forecast.
The FTSE/JSE Africa All Share Index (JALSH) added 0.2 percent in Johannesburg and the ISE National 100 Index (XU100) rose 0.8 percent in Istanbul.
The MSCI Emerging Markets Index has fallen 8.1 percent in the past three months amid concern Europe’s worsening debt crisis will drag on developing nations’ overseas shipments.
The Hang Seng China Enterprises Index (HSCEI) sank 0.6 percent in Hong Kong to the lowest close since June 28, while the Shanghai Composite Index slipped to the lowest since Jan. 6. China Shipping Development Co. (1138) dropped 4.1 percent on concern trade flows are declining.
ZTE Corp. (763), China’s second-biggest maker of telecommunications equipment, fell 8.8 percent to a three-year low on speculation slower growth may threaten exports.
Data on July 13 is expected to show China’s economy expanded 7.7 percent in the second quarter, the slowest pace in three years, according to the median estimate of 35 economists surveyed by Bloomberg.
The Dubai Financial Market General Index (DFMGI) fell 0.2 percent.
Royal Bank of Scotland Group Plc, Commerzbank AG and Standard Bank Group Ltd. (SBK) abandoned talks with Dubai Group to restructure $10 billion of debt after failing to reach an agreement, two people familiar with the matter said. Dubai Group, controlled by Dubai Holding LLC, is among several government-owned companies in the Middle Eastern emirate seeking to restructure loans after property and asset values slumped and credit markets froze.
The extra yield investors demand to own emerging-market debt over U.S. Treasuries fell one basis point, or 0.01 percentage point, to 371, according to JPMorgan Chase & Co.’s EMBI Global Index.
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