Emerging-market stocks drop most in two weeks on China concerns

July 9 (Bloomberg) -- Emerging-market stocks tumbled the most in two weeks after Chinese Premier Wen Jiabao said the world’s second-largest economy faces “relatively large” downward pressure.

The MSCI Emerging Markets Index lost 1.2 percent to 934.89 by 9:22 a.m. in New York, set for the steepest drop since June 25. Technology companies led the retreat with HTC Corp., Asia’s second-largest smartphone maker, sliding to a two-year low after profit declined. United Co. Rusal slumped to the lowest level on record in Moscow. Egypt’s EGX 30 Index fell the most in three weeks after President Mohamed Mursi reinstated parliament, reversing the military’s decision.

China’s Wen said the government will intensify fine-tuning of policies, the state-owned Xinhua News Agency reported yesterday. The nation’s consumer-price inflation eased to a 29- month low in June, the National Bureau of Statistics said today in Beijing. American employers added fewer workers to payrolls than forecast in June, a July 6 report showed.

“The disappointing U.S. jobs data, which is key for consumption, and lower price gains in China all point to slowing growth,” Chu Moon Sung, a Seoul-based fund manager at Shinhan BNP Paribas Asset Management Co., which oversees about $28 billion, said by phone today. “It’s inevitable some developing countries that highly depend on exports will feel the pinch.”

The MSCI Emerging Market gauge is headed for its longest losing streak in a month. The measure has added 2 percent in 2012 and trades at a multiple of 10 times estimated earnings, compared with 12 for the MSCI World Index, according to data compiled by Bloomberg, The index of developed nations has added 3.4 percent this year.

Higher Volatility

The IShares MSCI Emerging Markets Index exchange-traded fund, the ETF tracking developing-nation shares, fell 0.6 percent to $38.55.

The Chicago Board Options Exchange Emerging Markets ETF Volatility Index, a measure of options prices on the fund and expectations of price swings, surged 5.7 percent to 28.43.

The extra yield investors demand to own emerging-market debt over U.S. Treasuries was unchanged at 373, according to JPMorgan Chase & Co.’s EMBI Global Index.

United Co., the world’s largest producer of aluminum, tumbled 2.8 percent to the lowest level since its shares began trading in 2010. Russia’s Micex Index dropped 0.6 percent.

The Hang Seng China Enterprises Index of Chinese companies listed in Hong Kong sank 2.4 percent, the most since June 4, while the Shanghai Composite Index slid 2.4 percent to a six- month low. The Philippine Stock Exchange Index dropped 1.8 percent and the Philippine peso weakened 0.4 percent versus the dollar after the government tightened rules on capital inflows.

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