JOHANNESBURG - Emerging-market shares tumbled on Monday, with Indian shares diving 12%, as coronavirus lockdowns around the world raised fears of a global recession.
MSCI’s index of emerging-market shares slumped 4.7% to near their lowest in four years, wiping out almost all of Friday’s gains. The index is down about 31% this year, in what could be its worst year since it lost 54% during the financial crisis in 2008.
The virus has so far claimed more than 14,000 lives and infected over 300,000 people globally. Containment efforts are bringing large parts of the world to a standstill.
Fears of a slumping global economy overrode all attempts to stem routs in financial markets. The fears worsened when Washington failed to pass a $1 trillion stimulus package on Sunday.
“Global equities got off to another terrible start after Democrats blocked the (U.S.) Senate’s coronavirus economic response rescue package,” wrote Edward Moya, senior market analyst, New York, OANDA.
“Risk aversion appears here to stay as investors become more fearful that this could be the worst global recession during peacetime.”
India’s rupee touched a record low of 76.1 against the dollar. Indian stocks were set for their worst day since April 1992 when the unwinding of a securities scam caused a market crash. India has registered 341 cases of coronavirus and seven deaths.
Severe losses throughout Asia saw MSCI’s index of Asia shares excluding Japan give up 5.5%.
Turkish shares lost almost 3%. Stocks in Russia and South Africa slumped more than 4%, leaving the latter near its lowest in almost seven years. On Friday, Moody’s is expected to strip South Africa of its last investment-grade rating.
Indonesia’s rupiah dropped 3.9%. Most other emerging-market currencies held losses to less than 1%, keeping an index of the currencies off a three-year low.
Lower oil prices kept pressure on Russia’s rouble. The country’s central bank on Friday left interest rates unchanged.