Emerging-market stocks fell, dragging the benchmark index to a six-month low, after China’s non- manufacturing sector grew at a slowest pace in more than a year and the U.S. added fewer jobs than economists forecast.
The MSCI Emerging Markets Index (MXEF) fell 1.5 percent to 880.47 as of 10:26 a.m. London time, the lowest intraday price since Nov. 28. The gauge slid 0.9 percent last week, an 11th straight week of declines. Hong Kong’s Hang Seng China Enterprises Index traded 21 percent below its peak this year after slumping 2.6 percent today. OAO Sberbank, Russia’s biggest bank, slid 1.8 percent as the ruble weakened. Mol Nyrt. (MOL), Hungary’s largest refiner, dropped as oil prices retreated. Turkish and South African stock gauges declined 0.3 percent.
China’s non-manufacturing purchasing managers’ index fell to 55.2 in May from 56.1 in April, the National Bureau of Statistics and China Federation of Logistics and Purchasing said yesterday in Beijing. U.S. unemployment rose to 8.2 percent in May and payrolls increased less than the most-pessimistic forecast in a Bloomberg News survey of economists, Labor Department figures showed June 1. European leaders remain divided on solutions for the region’s debt crisis.
“Elements of a perfect storm are emerging in the market, driving investors to take money off the table and raise cash,” said Paul Joseph Garcia, who helps manage about $17 billion at BPI Asset Management Inc. “Data from the U.S. and China combined with Europe’s debt crisis are feeding fears of a global slowdown.”
Oil Declines
The MSCI Emerging Markets Index has retreated 4 percent this year, compared with a 2.7 percent drop in the MSCI World Index. Shares in the emerging-markets gauge are trading at 9.7 estimated earnings, cheaper than the MSCI World’s multiple of 11.4.
The BUX Index (BUX) in Hungary dropped 0.7 percent as Mol Nyrt slipped as much as 2.5 percent. Oil declined for a fifth day in New York to the lowest price in almost eight months on signs of an economic slowdown in the U.S. and China.
“We’re very, very negative on the outlook” for oil demand this year, Johannes Benigni, managing director of JBC Energy GmbH, a researcher in Vienna, said in an interview on Bloomberg Television. Crude consumption will undergo a “significant contraction” in advanced economies even as demand grows in Asia and the Middle East, he said. “Economic indicators are not looking great.”
South Africa
South Africa’s FTSE/JSE Africa All Share Index (JALSH) retreated 0.4 percent, led by a 2 percent decline in Sasol Ltd. (SOL), the largest producer of motor fuels from coal.
Russia’s Micex Index dropped 0.1 percent, paring an earlier 1.4 percent decline. Poland’s WIG 20 Index (WIG20) jumped 0.6 percent. The PX Index (PX) in the Czech Republic gained 0.5 percent.
The ruble led a decline in 16 emerging-market currencies monitored by Bloomberg, poised for its weakest close in more than three years, after signs of an economic slowdown in China hurt prices for oil, Russia’s main export.
The lira strengthened after Turkey’s inflation slowed the most since January 2003 after the crisis in Europe forced the central bank to tighten monetary policy and food prices slumped.
A measure tracking technology stocks on MSCI’s emerging- markets index sank 3.5 percent today, the most among 10 industry groups. Samsung Electronics (005930) fell 3 percent in Seoul, while Taiwan Semiconductor Manufacturing Co. (2330), the world’s largest custom maker of chips, slid 4.3 percent in Taipei, capping a two-day, 10 percent loss that’s the biggest since July 2008.
China Growth
JPMorgan Chase & Co. cut China’s 2012 growth forecast to 7.7 percent from its previous estimate of 8 percent, citing increasing downside risks in the euro area. Europe is China’s biggest export market, making up about 18 percent of the nation’s overseas shipments, according to Shenyin & Wanguo Securities Co.
A gauge of industrial companies dropped 2.8 percent, bound for the sharpest loss since Nov. 23. Lonking Holdings Ltd. (3339), a Chinese construction machinery maker, plunged 10 percent in Hong Kong after forecasting lower profit.
The Markit iTraxx SovX CEEMEA Index of eastern European, Middle East and Africa credit-default swaps rose three basis points to 355, according to data compiled by Bloomberg.
The extra yield investors demand to own emerging-market debt over U.S. Treasuries declined two basis points, or 0.02 percentage point, to 438, according to JPMorgan Chase & Co.’s EMBI Global Index.
To contact the reporter on this story: Ian Sayson in Manila at isayson@bloomberg.net Stephen Gunnion in Johannesburg at sgunnion@bloomberg.net
To contact the editor responsible for this story: Darren Boey at dboey@bloomberg.net Gavin Serkin at gserkin@bloomberg.net
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