Emerging-Market Stocks Tumble, Currencies Weaken on Global Recession Risk - Bloomberg

Emerging-market stocks sank for a fourth day, sending the benchmark index to its largest weekly rout since May 2010, amid concerns about Europe’s debt crisis and slower growth in the U.S. Currencies fell versus the dollar this week.

The MSCI Emerging Markets Index fell 3 percent to 1,041.07 at 4:30 p.m. in New York. The gauge entered a so-called correction yesterday, falling more than 10 percent from this year’s high. Argentina’s Merval Index deepened losses after dropping the most yesterday among 91 equity benchmarks tracked by Bloomberg. Turkey’s benchmark lost the most since May 2010 with a 5.2 percent slump and Hungary’s BUX Index fell 19 percent from an April peak. Brazil’s Bovespa index added 0.3 percent, still ending the week with a 10 percent decline, the most since November 2008. Russia’s Micex Index fell 2 percent.

Borrowing costs for Italy and Spain, the euro zone’s third- and fourth-largest economies, have surged since an aid plan for Greece and other euro-region nations approved July 21 by the European Union summit failed to end contagion to more countries. U.S. payrolls rose by a better-than-forecast 117,000 workers in July, after a 46,000 increase in June that was more than originally estimated, the Labor Department reported today. The data wasn’t enough to buoy global markets.

MSCI’s emerging market index is down 14 percent since the May 2 high. The drop today has extended this week’s slump to 8.5 percent. The gauge measuring stocks in developed nations has also lost 8.6 percent over the past five days.
‘Better Shape’

Templeton Asset Management’s Mark Mobius said emerging economies are in “better shape” than developed nations amid turmoil roiling global markets.

“We’re looking at equities all the time and equities are looking better and better with all this turmoil,” Mobius, who oversees about $50 billion as executive chairman of Templeton’s emerging markets group, said in a Bloomberg Television interview today. “The emerging markets are in much better shape than the developed countries. If you look at the gross domestic product levels, foreign exchange reserves, emerging markets are in a very, very sweet spot.” Read More