July 12 (Bloomberg) -- Emerging-market stocks fell for a seventh day on concern the global slowdown is worsening after South Korea unexpectedly cut interest rates and Infosys Ltd. missed profit estimates and reduced its sales forecast.
The MSCI Emerging Markets Index sank 2.2 percent to 912.03 by 10:13 a.m. in New York, the biggest intraday drop since May 23 and set for its longest losing streak since November. The Kospi Index in Seoul and Chinese stocks listed in Hong Kong slid 2.2 percent while oil company Petroleo Brasileiro SA and iron- ore producer Vale SA contributed the most to the Bovespa index’s retreat in Brazil. Benchmark gauges fell at least 1 percent in India, Taiwan, Turkey and Russia.
Infosys, India’s second-largest software exporter, plunged 8.4 percent to push technology stocks lower. The Bank of Korea cut borrowing costs for the first time in more than three years, saying the economy is growing less than expected, while the Bank of Japan altered its stimulus program without expanding it. A report due tomorrow is expected to show China’s economy grew at the slowest pace in three years in the second quarter.
“While central banks are taking steps to help avert a further slowdown in growth, investors aren’t reacting positively because they think lowering the rate alone won’t resolve problems markets are facing,” Kim Jae Dong, the head of equity at SEI Asset Korea Co., which manages about $5.3 billion in assets, said by phone today. “What they want is more drastic fiscal measures that could actually spur companies to spend and increase people’s disposable income.”
The U.S. budget deficit probably widened to $60 billion in June from $43.1 billion a year earlier, a Bloomberg survey showed ahead of a report today. Jobless claims in the U.S. decreased by 26,000 in the week ended July 7 to 350,000, the fewest since March 2008, Labor Department figures showed today.
The emerging-markets gauge has fallen 0.5 percent so far this year, compared with a 1.7 percent gain in the MSCI World Index. Shares in the developing-nation measure are trading at 9.9 times estimated earnings, compared with the MSCI World’s multiple of 12, according to data compiled by Bloomberg.
The IShares MSCI Emerging Markets Index exchange-traded fund, the ETF tracking developing-nation shares, slid 2.3 percent to $37.51.
The Chicago Board Options Exchange Emerging Markets ETF Volatility Index, a measure of options prices on the fund and expectations of price swings, rose 8.2 percent to 28.81, the most in three weeks.