For the first time in last 3 days, the emerging stocks have experienced a fall, mainly because of the retreats in the Russian and Brazilian markets. However, thanks to the accelerated growth of Chinese industries (Since August, the industries have grown at the fastest speed), the Asian equities have posted gains. The MSCI Emerging Markets Index went down by 0.3% and it is at 1070.01 currently. On the other hand, the iShares MSCI Emerging Markets Index exchange traded fund has slipped by 1.4% and it is at 43.87 currently. This has experienced the biggest drop since 14th November, 2012. The GSCI gauge of the Standard & Poor of the 24 raw materials also retreated by 0.7% led by the decline of oil by 1.5%.
According to the Economist of Wells & Fargo, Aryam Vazquez, there are political jitters in Europe and hence the investors have a pullback in risk. The political turbulence factor is actually taking precedence over the sound economic conditions in the emerging markets. Aryam added that many of these emerging countries are currently known as commodities producers, exporters and consumers. Hence, if a pullback in risk assets such as the commodities takes place, the emerging markets will definitely experience an impact of the same.
The benchmark gauge of Brazil, the Bovespa Index went down by 1.5%, mainly because of the decline in Braskem SA share prices. The biggest petrochemical producer of the Latin America, Braskem SA saw its share prices going down by 5.4%. On the other hand, the oil company controlled by Eike Batista, a billionaire, OGX tumbled by 3.1% to the lowest price in the last 4 years. The company reported drop in the overall production and this played a pivotal part in the decline, as stated by the economists.
The Philippine Stock Exchange Index went ahead by 1.9% though, marking the biggest gain in all the benchmark gauges in Asia. Expansion plans were posted by several companies and these helped in increasing the investors’ confidence in the earnings and economic growth of the country.
The benchmark gauge of Russia, the Micex Index posted loss of 0.8%, however, overall trading volume was 13% more than the average of last 30 days. OAO Rosneft, the biggest oil producer of Russia experienced big slump. Other benchmark gauges of Hungary and Czech Republic also experienced slumps of 0.9%.