Emerging-market stocks tumbled the most in 10 months and currencies depreciated as weaker China manufacturing data and speculation the Federal Reserve will scale back stimulus cut demand for riskier assets. Russia led losses in Europe.
Taiwan Semiconductor Manufacturing Co., the world’s largest contract maker of chips, slumped the most since June in Taipei. Cosco Pacific Ltd., the container-terminal arm of China’s biggest shipping group, retreated 2.1 percent in Hong Kong. OAO Bashneft, a Russian regional crude refiner, fell as much as 6.7 percent in Moscow, as oil declined for a third day. KGHM Polska Miedz SA, Poland’s sole copper producer, sank in Warsaw as industrial metal slid the most in three weeks. The rand weakened for an 11th day, its longest losing streak in 25 years.
The MSCI Emerging Markets Index declined 2 percent to 1,027.20 at 13:25 p.m. in London, set for the steepest drop since July 23. The gauge’s 30-day volatility rose to 12, the highest level in seven months. China’s manufacturing unexpectedly shrank for the first time in seven months, a report showed today. The Fed could “step down” the pace of asset purchases if the U.S. labor market continues to improve and “we have confidence that that is going to be sustained,” Chairman Ben S. Bernanke said yesterday.
“Weak data from China combined with speculation the Fed may phase out quantitative easing are causing jitters in the market,” Paul Joseph Garcia, who helps manage the equivalent of $18 billion as head of institutional business at BPI Asset Management Inc., said in Manila. Investors are “reducing their holdings of risk assets,” Garcia said.
The extra yield investors demand to own emerging-market debt over U.S. Treasuries rose 4 basis points, or 0.04 percentage point, to 272 basis points, according to JPMorgan Chase & Co.’s EMBI Global Diversified Index.
The Hang Seng China Enterprises Index of mainland companies listed in Hong Kong dropped 2.8 percent, the most since April 5. Russia’s Micex Index slid 2.9 percent, heading for it steepest loss since July 23 and falling for the first time in five days. Benchmark indexes in Turkey and the Czech Republic retreated at least 1.6 percent.
Bashneft slumped 6.6 percent, its first decline in six days, while OAO Rosneft, Russia’s biggest crude producer, lost 3.8 percent, the most on a closing basis since May 4. Oil fell 1 percent on China data and U.S. gasoline stockpiles increased.
OAO TNK-BP Holding declined 4.1 percent, poised for the lowest close since April 5, after Igor Sechin, chief executive officer of the oil company’s new owner, stoked concern shareholders won’t get a payout for last year. Sechin proposed that state-controlled Rosneft will be accountable for TNK-BP dividends from March 21, the date when it took control of the company, Rosneft’s press service said today by phone.