Emerging markets drop to six-week low as commodity stocks slide

Emerging market stocks dropped, poised for a six-week low, as falling metals prices sank commodities shares and Turkish banks slid.

OAO Severstal, a Russian steelmaker, led declines in Moscow’s Micex Index after an explosion at one of its coal mines. Akbank TAS, a Turkish lender part-owned by Citigroup Inc., fell to the lowest since Dec. 3 after Yapi & Kredi Bankasi AS cut the stock to the equivalent of sell. PT United Tractors gained the most in almost six weeks in Jakarta on speculation the company may sustain a recovery in sales, pushing Indonesia’s main index to a record level.

The MSCI Emerging Markets Index fell 0.2% to 1,058.64 by 2:22 p.m. in New York. Turkey’s ISE National 100 Index extended its decline to the lowest since Dec. 21 after a car bomb at the border with Syria killed at least 10, according to the Anatolia news agency. The Bloomberg Base Metals 3-Month Price Commodity Index slid 0.8%, while copper fell the most in a month as China’s New Year’s holiday week got underway.

“You’re still seeing this underperformance in emerging markets which are most sensitive to cyclical growth sentiment,” Michael Gayed, the chief investment strategist at Pension Partners LLC, in New York said by phone. “On a daily basis, almost continuously, emerging markets keep weakening.”

Markets in China, Hong Kong, South Korea, Taiwan, Vietnam and Malaysia are shut for the New Year break today. Brazil’s market is closed for Carnival. Indonesia’s Jakarta Composite Index rose 0.3 percent to the highest level since at least April 1983.

Moscow IPO

The iShares MSCI Emerging Markets Index exchange-traded fund, the ETF tracking developing-nation shares, fell 0.2%. The Chicago Board Options Exchange Emerging Markets ETF Volatility Index, a measure of options prices on the fund and expectations of price swings, slipped 0.5%. Price volatility on the MSCI Emerging Markets Index was at 8.8, the lowest level on record for 100-day volatility, according to data compiled by Bloomberg dating back to 2003.

Russia’s Micex Index fell 0.3% on its fourth day of declines as Brent oil slid from a nine-month high. The Russian Direct Investment Fund will seek to buy as much as $100 million of stock in the Moscow Exchange’s initial public offering, according to a person with knowledge of the Kremlin-backed private-equity fund’s plan, who asked not to be identified because the information isn’t public.

Poland’s WIG 20 rose 0.1%. Dubai’s DFM General Index lost 0.1%, after climbing as much as 1%.

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