Emerging stocks fell to a three- month low, led by consumer companies, as concern the euro area is struggling to emerge from a recession overshadowed an expansion in China’s manufacturing
Brazil’s real dropped to two per dollar for the first time since January.
Bloomberg reports that KGHM Polska, which gets 17 per cent of its revenue from Germany, led declines in Warsaw. Indian automakers Bajaj Auto Limited and Tata Motors Limited fell by at least 4.2 per cent.
Tencent Holdings Limited, China’s largest Internet company, slumped in Hong Kong as analysts cut share price forecasts. Brazil’s Bovespa Index headed for a four-month low as miner MMX Mineracao & Metalicos SA dropped a seventh day.
The MSCI Emerging Markets Index slid by 0.5 per cent to 1,020.85 by 2:28 p.m. in New York, headed for the lowest close since Dec. 5. Manufacturing output in Germany unexpectedly fell this month while services and factory output in the euro area contracted more than forecast. China’s manufacturing expanded at a faster-than-forecast pace.
“Euro-zone growth, budget deficit and debt burden are still major concerns,” the head of emerging-markets strategy at BNP Paribas SA in London, Mr. Martial Godet, said attention is “shifting to financial issues, to default issues, all negative for equities.”
The European Central Bank said it will cut Cypriot banks off from emergency funds after March 25 unless the nation agrees on a bailout with the European Union and International Monetary Fund. Stocks fell even as data showed fewer Americans than forecast filed first-time claims for unemployment insurance.
The iShares MSCI Emerging Markets Index exchange-traded fund fell by one per cent to $41.80. The Chicago Board Options Exchange Emerging Markets ETF Volatility Index, a measure of options prices on the fund and expectations of price swings, rose by 7.5 per cent to 19.45.
Nine out of 10 industry groups in the MSCI Emerging Markets Index fell, led by gauges of consumer and utility companies.
Phone shares rose. The broader measure has slipped 3.3 per cent this year, trailing a 6.6 per cent gain in the MSCI World Index of developed-country stocks.
The developing-nations measure trades at 10.7 times estimated 12-month earnings, compared with the MSCI World’s 14.1 times, data compiled by Bloomberg show.
Brazil’s Bovespa fell by one per cent as MMX dropped 6.3 per cent, leading Brazilian commodity exporters lower amid concern that slower growth in Europe will sap demand for raw materials.
The real slid 0.8 per cent versus the dollar, the most among 25 emerging market currencies tracked by Bloomberg, on speculation government intervention in the economy to spur growth is prompting investors to withdraw money from the country.