Emerging stocks headed to a four- month low, led by energy companies, as declining commodities prices dragged down equities from Brazil and Russia, according to Bloomberg report yesterday.
The MSCI Emerging Markets Index (MXEF) dropped 0.9 percent to 1,000.02 by 11:55 a.m. in New York. Copper led declines in industrial metals after the International Monetary Fund cut its forecast for China’s economic growth yesterday, while crude oil dropped to its lowest level in four months. The rand weakened 0.6 percent versus the dollar and South African bonds gained, as March inflation was slower than predicted by economists.
“Commodities have been in a downtrend for a while, and that accelerated with the GDP out of China,” Walter Todd, who oversees about $940 million as chief investment officer of Greenwood Capital Associates LLC in Greenwood, South Carolina, said in a telephone interview. The IMF cutting forecasts “certainly doesn’t help.”
Gauges of energy and material stocks in the MSCI Emerging Markets Index fell the most among 10 industry groups. The emerging-markets index slipped 4.9 percent this year, trailing a 6.8 percent increase in the MSCI World Index of developed- country stocks. The emerging-markets measure trades at 10.6 times 12-month projected profit, compared with the MSCI World’s 14, data compiled by Bloomberg show.
OAO Gazprom, Russia’s biggest natural-gas producer, slid to the lowest level since March 2009. Brazil’s Bovespa index slumped as MMX Mineracao & Metalicos SA, the iron-ore producer of Brazilian billionaire Eike Batista, tumbled 4 percent. KGHM (KGH) Polska Miedz SA tumbled 7.3 percent in Warsaw as copper retreated, driving Poland’s WIG20 Index to a seven-month low.
