Emerging-market stocks fall most in 3 weeks on economy concern

Emerging-market stocks fell the most in almost three weeks, led by raw-materials producers and Asian exporters, as lower commodities and a drop in US retail sales renewed concern the global recession will erode profits.

The MSCI Emerging Markets Index declined 2.1 per cent to 695.09 as of 10:32 am in London, the steepest retreat since April 27. The 23-country benchmark has slid the past four days, the longest losing streak since January, after a two-month rally sent the index up as much as 53 per cent through last week.

“What we’re probably seeing now is an overdue correction and that’s much needed,” Lorraine Tan, head of Asia-Pacific strategy at Standard & Poor’s, said in a Bloomberg Television interview from Singapore. The US retail-sales report shows investors were a little early to get too excited about prospects for a recovery in the economy and earnings, she said.

China’s Zijin Mining Group Co and Russia’s OAO Lukoil dropped as copper and oil fell. Taiwan Semiconductor Manufacturing Co lost 3.4 per cent and Samsung Electronics Co retreated for a fourth day after the US government said purchases at stores unexpectedly slid 0.4 per cent last month.

Thirteen of 15 developing-nation stock markets that were open for trading on Friday declined. India’s Bombay Stock Exchange Sensitive Index lost 1.4 per cent after exit polls indicated no political party will win enough votes to form the next government ahead of the official count on May 16.

Abu Dhabi National Energy Co led a 1 per cent drop in the emirate’s benchmark ADX General Index after saying first-quarter profit tumbled 90 per cent.

Abu Dhabi shares drop: The extra yield investors demand to own emerging-market bonds instead of US Treasuries rose for a fifth day, climbing five basis points to 5.08 percentage points, according to JPMorgan Chase & Co’s EMBI+ index.

Crude oil for June delivery fell as much as 2.5 per cent to $56.60 a barrel on the New York Mercantile Exchange after the International Energy Agency cut its oil-demand forecast for a ninth consecutive month. Copper for delivery in three months dropped as much as 1.8 per cent on the London Metal Exchange, leading a decline in industrial metals.

Zijin Mining lost 3.8 per cent and Lukoil, Russia’s second- largest oil company, slid 2.2 per cent.

Taiwan Semiconductor, the world’s largest contract manufacturer of chips, dropped the most since April 8, while Samsung retreated 1.4 per cent.

India Elections: The 0.4 per cent decrease in US retail sales followed a revised 1.3 per cent drop in March that was larger than previously estimated. Economists had forecast April retail sales would be unchanged, according to a Bloomberg News survey.

Reliance Industries Ltd, India’s largest company by market value, dropped 1.6 per cent and Bharti Airtel Ltd, the nation’s biggest mobile-phone operator, slid 4 per cent.

Six television networks in India forecast the ruling alliance led by the Congress party may emerge just ahead of its chief rival headed by the Bharatiya Janata Party. CNN-IBN predicted Congress and its allies will get as many as 205 seats compared with a maximum 185 for the opposing coalition. Star News-Nielsen and News X gave the Congress-led bloc 199 seats to 191 for the BJP grouping.

Abu Dhabi National Energy, the state-controlled power and oil producer known as Taqa, slumped 7.4 per cent after saying revenue from crude and natural-gas sales declined and costs increased.