Johannesburg - Emerging-market stocks extended their longest losing streak since August on concern economies are faltering. South African banks plummeted the most in 14 years and Chinese commodity companies fell to the lowest level since the global financial crisis.
A gauge of six South African lenders slid to the lowest level since March 2014 after President Jacob Zuma fired Finance Minister Nhlanhla Nene, adding to economic strains caused by a plunge in metal prices, credit downgrades and power shortages. A measure of nine Chinese raw-material producers traded in Hong Kong fell to the lowest since December 2008 as investors speculated that growth in domestic consumption and services will fail to offset a manufacturing slowdown in the world’s second- largest economy.
Analysts’ projections for full-year corporate earnings in emerging markets are near the lowest since 2009 as China’s economy cools, putting a drag on other commodity-dependent economies. Investors are holding back share purchases as the holiday season approaches and with six days to go to what may be the Federal Reserve’s first interest-rate increase in nine years.
“There are growth fears,” Aurelija Augulyte, a strategist at Nordea Markets in Copenhagen, said by e-mail. “Markets see the yuan and China as key risks.”
The MSCI Emerging Markets Index fell 0.5 percent to 790.99 at 7:06 a.m. in New York, for a seventh day of losses. A gauge of momentum called the relative strength index fell to 30, the threshold that signals investor bearishness is peaking relative to historical averages. The equity benchmark is heading for a third weekly retreat as the Federal Reserve prepares to announce its interest-rate decision on December 16.
Seven out of 10 industry groups in the developing-nation stocks gauge retreated. The measure has slumped 17 percent this year, poised for its worst annual drop since 2011. It trades at 10.9 times the projected earnings of its members, a 30 percent discount to advanced-nation equities.
Stocks
In Johannesburg, the FTSE/JSE Africa Banks Index fell 11 percent, the biggest plunge since October 2001. South Africa’s president took the economy closer to the brink of a junk credit rating after firing his finance minister in a move investors say may undermine fiscal credibility. Zuma removed Nhlanhla Nene from his post after 19 months without giving any reasons except to say that he would be moved to another key role. His replacement is David van Rooyen, a lawmaker who is little known to South Africans or investors.
The MSCI China/Materials Index declined 2.4 percent. None of the nine stocks in the gauge rose. Zijin Mining Group lost 4 percent, the biggest retreat since October. Among mainland shares, Metallurgical Corporation of China and China Minmetals Rare Earth slid more than 4 percent. The Shanghai Composite Index declined 0.5 percent, erasing a gain of as much as 0.9 percent.
The Dubai Financial Market General Index dropped for a fifth day, the longest slump since August 18.
Currencies
An index of 20 emerging-market currencies fell 0.2 percent, coming within 0.2 percent of a record low reached on December 8. The South African rand led losses, weakening 1.2 percent against the dollar.
The ruble gained for a third day as oil advanced and investors bet a decision by the Bank of Russia to keep monetary policy unchanged will support the currency.
Bonds
South Africa’s government bonds fell, sending the yield on debt maturing in 2026 higher by 100 basis points to 9.82 percent. That is the highest since 2008.
The premium investors demand to own emerging-market debt over U.S. Treasuries narrowed one basis point to 402, according to JPMorgan Chase & Co indexes.
BLOOMBERG