Emerging-market stocks fell to a seven-week low and currencies in India and Turkey sank to records on Wednesday as speculation grew that the United States will take military action in Syria.
Stocks in the Philippines led declines as the benchmark index tumbled to an eight-month low on concern capital outflows will accelerate.
Bloomberg News reported on Wednesday, that India’s rupee plunged the most in two decades as a surge in oil threatened to worsen the current-account deficit, while the Turkish lira sank to the lowest level since at least 1981.
Russia’s sale of 10-year bonds flopped after the government offered yields below what investors demanded.
The MSCI Emerging Markets Index dropped by 0.4 per cent to 911.40 at 1:22 p.m. in New York. Rising tension in Syria has worsened a rout that erased more than $1tn from the value of developing-nation equities this year.
Foreign investors pulled about $2.4bn this month from markets in India, Indonesia, Thailand and the Philippines amid speculation that the Federal Reserve will reduce monetary stimulus.
“The tensions in the Middle East and the threat of imminent military action are casting a pall over the equity markets,” Alan Gayle, senior strategist at RidgeWorth Capital Management, said by phone from Atlanta. His firm oversees about $48bn.
“The global concerns about Syria and higher oil prices continue to weigh.”
Eight of 10 groups in the MSCI Emerging Markets Index fell today, led by health-care shares. The gauge of developing nations extended this year’s plunge to 14 per cent, compared with an 11 per cent advance for a measure of developed markets.
The iShares MSCI Emerging Markets Index exchange-traded fund rose 0.9 percent to $37.70. The Chicago Board Options Exchange Emerging Markets ETF Volatility Index, a measure of options prices on the fund and expectations of price swings, retreated by 4.5 per cent to 27.28.
Brazil’s Ibovespa snapped a two-day drop as Brookfield Incorporacoes SA led homebuilders higher. The real climbed as the central bank’s effort to support the currency offset demand for a refuge in the US dollar.