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%.
Mexican Stocks
The benchmark IPC index of 35 Mexican companies dropped 0.1% as the country’s industrial production fell in December for the first time in three years.
Petroleo Brasileiro SA’s American depositary receipts fell 1.8% in New York after newspaper O Estado de Sao Paulo reported that the state-run oil company is warning the government that its debt ratios may rise. ADRs of Beijing-based Ambow Education Holding Ltd. tumbled 11% to trade at a record low, while Pactera Technology International Ltd. slipped 3%.
Akbank and Turkiye Garanti Bankasi AS dragged Turkey’s ISE National 100 Index 1.8% lower. India’s Sensex slipped 0.1%, falling for an eight day, the longest losing streak since November 2011, amid economic growth and corporate earnings concerns. The rupee touched the lowest level in two weeks on speculation capital inflows have slowed.
Trading volumes on the Jakarta gauge were 25% below the 30-day average and Micex trading was 20% less than average.
Consumer Stocks
Venezuelan government bonds rallied, with benchmark yields falling to a five-year low, after the government devalued the bolivar, helping cut the budget deficit by generating more local currency from its oil exports. President Hugo Chavez, who is recovering from cancer surgery in Cuba, ordered his government to weaken the exchange rate by 32% to 6.3 bolivars per dollar starting Feb. 13, Finance Minister Jorge Giordani told reporters last week.
Consumer companies Arcos Dorados Holdings Inc., Coca-Cola Femsa SAB, Grupo Nutresa SA, industrial companies Masisa SA and Copa Holdings SA and MercadoLibre Inc., operator of an online trading site, have “significant exposure to Venezuela,” Morgan Stanley said in an e-mailed report today.
The Czech koruna was almost unchanged versus the euro after its best weekly gain in 14 months, as slower-than-expected inflation renewed speculation the central bank may weaken the currency. The statistics office in Prague said today the consumer-price index grew at the slowest pace in 16 months in January, missing analyst estimates. Last week, the koruna rallied 1.8% after Governor Miroslav Singer signaled the need to sell the currency to ease monetary conditions is “less urgent.”
Currencies Gain
South Korea’s won strengthened 0.3% versus the dollar in offshore trading. Indonesia’s rupiah rose to the highest in almost three weeks on optimism the central bank’s efforts to set an onshore fixing for its derivative contracts will stabilize the currency and bolster demand for local assets.
The MSCI Emerging Markets Index has added 0.3% this year, trailing a 5% increase by the MSCI World Index. The emerging-markets index trades at 10.3 times estimated profit, compared with the MSCI World’s 13.7 times, data compiled by Bloomberg show.
Severstal fell 2.5% after at least 10 coalminers died in an explosion in Russia’s northern Komi region. The blast may have been caused by a build-up of methane at a deposit owned by the steelmaker, according to the Emergency Ministry.
Akbank sank 3.4% in Istanbul after Yapi Kredi cut its stock recommendation to an equivalent of sell from hold and lowered the price target, according to an e-mailed report. Garanti Bank slid 3.2%.
New Models
Tofas Turk Otomobil Fabrikasi AS, the Turkish unit of Fiat SpA in partnership with Koc Holding AS, rose 0.5%. Chief Executive Officer Kamil Basaran said on Feb. 10 the company will disclose in July details about plans to develop two new subcompact models. HSBC Holdings Plc raised Tofas to an equivalent of buy from an equivalent of hold.
Mol Nyrt., Hungary’s biggest refiner, rebounded from its steepest slump in more than 15 months, leading a rally in Hungarian stocks. Mol rose 0.5% after dropping 5% on Feb. 8 as Dana Gas PJSC sold 1.675 million shares in the refiner to help refinance its Sukuk debt. The transaction, which Bloomberg News first reported on Feb. 7, was confirmed by Dana in a statement yesterday.
Air Arabia PJSC rose 3.3% to the highest level since May 2010 in Dubai on volume of almost five times the three-month daily average on bets improved full-year profit may prompt the airline to pay a bigger dividend.
Gold Fields
Gold Fields Ltd. slumped 1.4% in Johannesburg, as it spun off mining assets into Sibanye Gold Ltd., which is set to start trading in New York today. Gold Fields on Nov. 29 said it would place deeper, more labor-intensive South African mines into Sibanye.
United Tractors rose 3.6% in Jakarta, the most since Jan. 2. The company may maintain a rebound in heavy-equipment sales after reporting its January figures, according to Pandu Anugrah, analyst at Maybank Kim Eng Securities in Jakarta. Those sales surged 96% last month from December, Investor Daily Indonesia reported Feb. 8.
PT XL Axiata, an Indonesian mobile-phone operator, added 3.7% after the same newspaper reported the company will refinance 4.5 trillion rupiah ($468 million) of debt this year.
Cipla Ltd. jumped 3.8% in Mumbai after the stock slumped 8.1% last week. Dr. Reddy’s Laboratories Ltd. gained 2.3% after a five-day drop dragged it to a five-week low.
The extra yield investors demand to own emerging-market debt over U.S. Treasuries slipped two basis points, or 0.02 percentage point, to 270 basis points, according to JPMorgan Chase & Co.’s EMBI Global Index.
