Emerging-Market Stocks Fall as Russian Shares Drop Most in World

By Natasha Doff and Harry Suhartono 

Emerging-market stocks declined as Russian shares slumped the most in the world, with pressure mounting on President Vladimir Putin after the downing of the Malaysian Air jet.
OAO Gazprom, the biggest stock on the Micex Index (INDEXCF) by market value, slid 2.3 percent as the gauge posted its longest losing streak since January. The Shanghai Composite Index declined amid concern new share sales may divert funds from existing shares. Brazil’s Ibovespa gained for a second-day as state-controlled lender Banco do Brasil SA advanced. Indonesia’s benchmark rallied to the highest since May 2013 before the release of presidential election results tomorrow.
The MSCI Emerging Markets Index slipped 0.1 percent to 1,062.03 by 11:34 a.m. in New York. European Union foreign ministers meeting in Brussels tomorrow will consider tougher sanctions on Russian individuals and companies, while Putin said the Malaysian plane crash shouldn’t be used for political aims.
“The risk of more far-reaching sanctions against Russiahas increased since the crash of the MH17,” Maarten-Jan Bakkum, an emerging-market strategist at ING Investment Co. in the Hague, said by e-mail.
Six out of 10 industry groups in the MSCI Emerging Markets Index declined, led by telecommunications and energy stocks. Russian lender Sberbank OAO was the biggest decliner on the developing-nation’s gauge by index points. Hon Hai Precision Industry Co., an assembler of Apple Inc. (AAPL)’s iPhones, jumped 2.8 percent in Taipei.

Circumstantial Evidence

The Micex retreated for the sixth day in Moscow, dropping 2.7 percent. The ruble fell 0.1 percent to 35.1779 per dollar, depreciating for the sixth time in seven sessions.
U.S. Secretary of State John Kerry said yesterday circumstantial evidence suggests Russia provided the missile that Ukrainian rebels used to shoot down the plane. Putin blamed the crash on the Ukrainian government, saying it wouldn’t have happened had it not fomented the conflict in the east.
The WIG30 Index in Warsaw fell 0.1 percent, declining for a second day. The FTSE/JSE Africa All Shares Index in Johannesburg decreased 0.5 percent, taking its three-day loss to 1.3 percent.
Egypt’s benchmark EGX 30 Index dropped 1.2 percent in its steepest slide since June 24. North Africa’s biggest stock exchange said today it will double the daily share price movement limit to 20 percent, starting Aug. 7, because of “market stability.”

Brazilian Stocks

The Ibovespa gained 0.2 percent as Banco do Brazil increased 1 percent. Brazilian stocks gained as a voter poll dimmed prospects for President Dilma Rousseff’s re-election bid, adding to speculation that a new leader might be able to rekindle growth in Latin America’s largest economy.
The premium investors demand to own emerging-market debt over U.S. Treasuries rose two basis points to 270, according to JPMorgan Chase & Co. indexes.
The Shanghai Composite Index (SHCOMP) slipped 0.2 percent on concern corporate earnings will disappoint and new share sales may divert funds from existing equities. Eleven companies will start to sell new shares this week. That may freeze subscription funds of about as much as 766.5 billion yuan ($123 billion), according to the Securities Daily.
“News from China continues to be worrying,” ING’s Bakkum said. “There has been more signs of system stress.”
The Hang Seng China Enterprises Index of mainland companies listed in Hong Kong dropped 0.8 percent.

Indonesia Election

The emerging-market gauge has risen 6 percent this year and trades at 11.1 times 12-month projected earnings, data compiled by Bloomberg show. The MSCI World Index gained 4.6 percent and is valued at a multiple of 15.
The Jakarta Composite Index climbed 0.8 percent and the rupiah strengthened 0.4 percent on speculation results will confirm Joko Widodo as Indonesia’s next president. Widodo secured 52.9 percent of the 129 million votes tallied by KawalPemilu.org yesterday, a volunteer-run website that tracks actual results uploaded to the election commission’s website.
The S&P BSE Sensex Index rose 0.3 percent in its fifth day of gains, the longest winning streak since April 2. Taiwan’s Taiex Index added 0.4 percent, ending a three-day loss