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.
The EGX 30 Index dropped 4.2 percent, the biggest slump since June 19. Mursi’s decree, which also called for a fresh parliamentary vote within 60 days after the approval of a new constitution in a public referendum, came after the military last month dissolved the assembly and assumed legislative authority.
The PX gauge of Prague-listed companies tumbled 1.8 percent as the Czech market reopened after two public holidays.
The BSE India Sensitive Index dropped 0.7 percent, the largest slide since June 18, as lower-than-average monsoon rains threaten the nation’s efforts to tame inflation and spur economic growth.
Technology Shares
All industry groups on the MSCI developing-markets index fell today, with industrial stocks the second-biggest decliners. E Ink Holdings Inc. sank the most in seven months, leading technology companies to the steepest drop among 10 industry groups on the MSCI Emerging Markets Index. The supplier to Amazon.com Inc.’s Kindle slumped 7 percent after June sales plunged 71 percent from a year earlier.
HTC retreated 5.6 percent in Taipei to its lowest since March 2010 after saying second-quarter net income declined 58 percent from a year earlier to NT$7.4 billion ($247 million). That compares with the NT$7.59 billion average estimate of 13 analysts surveyed by Bloomberg.
A report later this week may show China’s economic growth slowed to 7.7 percent in the second quarter.The People’s Bank of China lowered the benchmark one-year lending rate by 0.31 percentage point on July 5, the second rate cut in a month.
Chinese economists’ forecasts for second-quarter growth are “too optimistic,” Lu Ting, China economist at Bank of America Corp.’s Merrill Lynch unit, said in a Bloomberg Television interview today from Hong Kong. He predicts two more interest- rate cuts by the end of this year and three more reductions in lenders’ reserve-requirement ratios.
