Emerging equities post worst slump since 2008

An index of emerging-market stocks fell this week to post the longest string of weekly declines since 2008, led by energy companies, as concern that a global slowdown will crimp consumer demand weighs on commodities.

The MSCI Emerging Markets Index dropped 0.6 per cent this week to 1,012.96, its seventh straight weekly slump. OAO Novatek, Russia’s second-largest gas producer, sank 21 per cent in London to lead weekly declines in the index, while OAO Novolipetsk Steel, Russia’s largest steelmaker by market value, fell to an almost three-year low. Moscow’s Micex Index slipped to a 2012 low, while Brazil’s Bovespa Index dropped 1.4 per cent.

Economic reports from around the world this week have bolstered concerns the world is headed for recession, with Chinese and US service-sector growth slowing and Europe’s jobless rate at a 15-year high. US employers added fewer jobs than economists forecast last month, data on Saturday showed, aiding oil’s slump below $100 a barrel in New York for the first time since February. Metals prices slid in London.

“The data has turned really bad the last couple of weeks,” Neil Shearing, a senior emerging-markets analyst at Capital Economics Ltd in London, said by phone on Saturday. “The weaker payroll data cautions investors and puts them in a wait- and-see mode for taking on risk.”

The MSCI Emerging Markets gauge has added 11 per cent this year and trades for 10.5 times estimated earnings of member companies, data compiled by Bloomberg show. That compares with a multiple of 12.3 times for the MSCI World Index of developed countries, which has gained seven per cent in 2012.

ETF slips
The IShares MSCI Emerging Markets Index exchange-traded fund, the most-traded ETF tracking developing-nation shares, fell 2.2 per cent in the week to $41.36, the lowest level since April 10. The Chicago Board Options Exchange Emerging Markets ETF Volatility Index, a measure of options prices on the fund and expectations of price swings, rose 3.1 per cent to 26.60.

Neither of Greece’s two major political parties that have supported the nation’s international bailouts — New Democracy and Socialist Pasok — will win an outright majority in May 6 elections, opinion polls show. Francois Hollande, the Socialist challenger for the French presidency who is leading conservative incumbent Nicolas Sarkozy in polls, has called for a re-negotiation of the budget pact crafted by European leaders in March to stave off a repeat of the region’s debt crisis.