Emerging-market stocks fell the most in more than eight months, led by Russian natural-gas producer OAO Gazprom, as global equities extended last week's selloff on concern world economic growth will slow.
Indexes in India, Russia, Taiwan, Malaysia and the Philippines all tumbled more than 3%. India's Infosys Technologies Ltd. and PetroChina Co. fell after US consumer confidence unexpectedly declined and China's government said it will take more steps to slow economic growth. OAO Gazprom, the world's biggest natural-gas producer, fell 3.9% to $9.53 on Russia's Trading System Index.
„It's a panic situation among investors and they're selling at ridiculous prices,” said Scott Lim, who helps manage $400 million as chief investment officer at CMS Dresdner Asset Management Sdn. in Kuala Lumpur. „The fundamentals haven't changed.” Morgan Stanley Capital International's Emerging Markets Index fell 3.8% to 844.18, adding to a four-day, 6.7% slump that erased its advance for 2007. The global measure is headed for the biggest drop since June 13 and the lowest close since November 20.
The emerging-markets index more than tripled between the end of 2002 and last year, outpacing gains in developed countries as worldwide expansion boosted demand for commodities. The MSCI World Index of developed stock markets rose 87% during the period. The Hang Seng China Enterprises Index, which tracks the so-called H shares of Chinese companies in Hong Kong, dropped 5.1% and is the worst performer this year among equity indexes tracked globally by Bloomberg. India's Sensitive index lost 3.7% and has plunged 15% from its peak.
South Korea's Kospi index lost 2.7%, while Pakistan's stock gauge declined 2.1%. Thailand was closed for a holiday. The Shanghai and Shenzhen 300 Index, which tracks yuan-denominated A shares listed on China's two exchanges, lost 1.3%. The gauge plunged 9.2% on February 27. Infosys, India's No. 2 software services exporter, fell 4.6% to 2006.6 rupees. Tenaga Nasional Bhd., Malaysia's biggest power producer, slumped 5.2% to 11 ringgit, while South Korea's Posco, the world's third-biggest steelmaker, lost 8.5% to 333,000 won. PetroChina, the nation's largest oil company, lost 4.1% to HK$8.63.
Elsewhere, Russia's ruble-denominated Micex tumbled 3.3%. South Africa's FTSE/JSE Africa All Share Index lost 2.5%. Turkey's Istanbul Stock Exchange National 100 Index retreated 3.3%. In Latin America, Brazil's Bovespa index slid 2.8%, while Mexico's Bolsa fell 2%. Before last week's retreat, the MSCI Emerging Markets had rebounded 41% from a sell-off in May and June that sent the index down 25%. A rout in stock markets worldwide started in China on February 27 amid concern the government of the fastest-growing major economy will tighten controls on investment. Last week the Standard & Poor's 500 Index fell 4.4%. Europe's Dow Jones Stoxx 600 Index today extended a 5.2% weekly slide, falling another 1.2%. US consumer confidence fell last month as fuel prices rose, according to data released on March 2, a day after the government reported an increase in jobless claims.
St. Louis Federal Reserve Bank President William Poole acknowledged there „could be” a recession in the US, while saying one isn't likely. The central bank's consensus estimate is for growth above 2.5% in the coming year. Meanwhile, China's Premier Wen Jiabao said today that the nation is seeking slower economic growth of 8% this year. The country will take more steps to curtail investment and lending to stop the economy from overheating. The same target in 2006 failed to stop China's economy from expanding 10.7%, the fastest pace in 11 years.
The central bank raised interest rates in April and August and last month ordered banks to set aside more money as reserves for the fifth time in eight months. „Slower economic growth will pressure the stock market by damping corporate earnings,” said Zhang Ling, who manages about $1.1 billion at ICBC Credit Suisse Asset Management Co. in Beijing. Currencies in Asia's emerging markets also weakened. The won reached the lowest in four months after global funds turned net sellers of Korean stocks last week, while Malaysia's ringgit dropped for a fifth day.
„I am staying out of this market,” said Alejandro Velasco, who helps manage more than $500 million at Banca Privada D'Andorra SA in Andorra. „We woke up this morning to the news of tumbling markets in Asia. It does not look good for stocks.” Commodity prices also declined on concern slowing global growth will damp demand. Copper for delivery in May fell 2.8% in Shanghai. Crude oil dropped 2.6% to $60.07 a barrel in New York. Gazprom fell 4.1% to 249.90 rubles in Micex trading. Anglo American Plc, the second-largest mining company, slid 2.5% to 341.24 rand in South Africa, while BHP Billiton lost 1.5% to 141.13 rand.
Poland's WIG20 Index sank 3.6% and the Czech PX Index fell 1.1%. Hungary's BUX Index slid 1.4%. Shares of CEZ, the biggest Czech utility group, dropped 1.9% to 840.4 koruna. Telekomunikacja, Poland's largest phone company, dropped 0.8% to 22.80 zloty. In the Middle East, the Tel Aviv 25 Index declined 1.5%. Egypt's CASE 30 Index slipped 1.9%, and Jordan's Amman Stock Exchange General Index fell 1.2%. Stocks in eastern Europe, the Middle East and Africa may have further to fall, given that the five previous sell-offs of 10% or more since 2003 have lasted 15 to 50 days, according to Citigroup Inc. However, strategists at the bank don't expect a prolonged slump. „Unless we see some deterioration to the earnings outlook, which we have not as yet, a few more days of selling will leave stocks looking” attractively valued, Andrew Howell and Geoffrey Dennis, strategists at Citigroup in New York, wrote in a report dated today. (Bloomberg)