Azernews.Az

By Bloomberg

Emerging-market stocks fell, ending their longest streak of gains since January 2005, as investors bet valuations near a five-year high have made stocks too expensive. The Turkish lira extended its all-time low.

United Co. Rusal headed for its lowest price this year, leading losses in Moscow-listed shares. Russian sovereign-bond yields slid to a four-month low. Chinese stocks trading in Hong Kong declined from the highest level since 2008. South African equities retreated for the first time in six days as Naspers Ltd. fell.

An 11-day, 8.7 percent rally pushed the MSCI Emerging Markets Index to trade at 12.5 times the projected earnings of its members, about a fifth higher than its average level since 2010. Tuesday’s losses in the benchmark for developing-nation equities came after a 0.5 percent drop in the Standard & Poor’s 500 Index on Monday and as fighting worsened in eastern Ukraine.

“Emerging market stocks are taking a breather,” Michael Wang, a strategist at Amiya Capital LLP in London, said by e- mail. “They’re responding to the weak close in the U.S. yesterday and some idiosyncratic issues such as a flareup in Ukraine violence. Given the earnings outlook, valuations aren’t that attractive.”

The MSCI Emerging Markets Index slid 0.7 percent to 1,034.39 at 1:20 p.m. in London. Its 14-day relative strength index rose to 78.9 on Monday, a two-year high. Levels above 70 signal to some traders that gains have gone too far, too fast.

2015 Gains

Emerging-market stocks were little changed for the year before the 11-day rally began on March 30, as oil-price volatility and a standoff between the new Greek government and its creditors offset bond purchases by the European Central Bank and interest-rate cuts from India to Turkey.

This month’s advances amid speculation China will boost stimulus have helped emerging-market stocks outpace their developed-country peers this year. The gauge has climbed 8.2 percent in 2015, compared with a 3.6 percent increase in the MSCI World Index.

“Valuations are becoming expensive,” Danny Wong Teck Meng, chief executive officer of Areca Capital Sdn., which manages 800 million ringgit ($216 million), said by phone from Kuala Lumpur. “Time to start to be selective in stocks. It is not a broad-based surge any more.”

United Co. Rusal fell 2.7 percent, extending its four-day losses to 9.8 percent. The company that was dethroned last year as the world’s largest aluminum producer restated its 2014 results on Monday to a loss of $91 million from a profit of $293 million. Russia’s Micex index lost 1.1 percent.

Chinese Growth

The Shanghai Composite Index climbed 0.3 percent before the release of economic growth data Wednesday. China’s first-quarter growth probably fell to 7 percent, the slowest pace since the first quarter of 2009, according to a Bloomberg survey.

Tencent Holdings Ltd., the operator of Asia’s most-popular message services, tumbled the most in a year in Hong Kong after its chairman, Ma Huateng, cut his stake to 9.65 percent from 9.86 percent. The Hang Seng China Enterprises Index dropped the most since January as China Merchants Bank Co. lost 6.1 percent.

Indonesian shares slipped 0.5 percent after the nation’s central bank will leave its main rate unchanged for a second month. South Korea’s Kospi index rose 0.6 percent to the highest level since August 2011, as Woori Bank rallied 14 percent.

The lira weakened 0.3 percent to 2.6774 against the dollar after trading as low as 2.6873. Russian five-year bond yields fell eight basis points to 11.21 percent, the lowest level since Dec. 2.

The premium investors demand to own emerging-market debt over U.S. Treasuries increased two basis points to 347, according to JPMorgan Chase & Co. indexes.