(Bloomberg) — Emerging-market stocks dropped for an 11th day, the longest losing streak since September 1990, on growing concern that the U.S. will raise the near-zero interest rates that have buoyed demand for assets in developing nations.
Turkish shares sank 5.1 percent and the lira fell to a record after the ruling party lost its parliamentary majority. HTC Corp. sank to a 10-year low in Taiwan as the smartphone maker cut its sales forecast. Iron ore producer Vale SA led a 0.3 percent decline in Brazilian stocks. The ruble strengthened as Russia’s central bank scaled back foreign-currency purchases.
The MSCI Emerging Markets Index declined 0.5 percent to 977.09, taking its decline since May 22 to 5.8 percent. Stocks have been tumbling amid a stream of data signaling that the U.S. economy may be strong enough to sustain its first interest-rate increase since 2006. Reports this week are forecast to show improvements in consumer sentiment and retail sales. Payrolls jumped in May by the most in five months, the Labor Department said Friday.
“Strong figures from the U.S. on Friday showed us that U.S. growth should be back on track and the interest-rate hike could happen later this year,” Hertta Alava, the head of emerging markets at FIM Asset Management Ltd. in Helsinki, said by e-mail. “I don’t expect a big sell-off, rather slowing summer trading and lack of momentum. Turkish elections are certainly causing some volatility.”
Turkey’s election result raises the prospect of a coalition and conflict with President Recep Tayyip Erdogan.
Turkiye Garanti Bankasi AS slumped 7.5 percent, leading the biggest decline in the Borsa Istanbul 100 Index since December 2013. The lira fell 3.3 percent. Erdogan’s AK Party failed to win a majority for the first time since 2002, setting up the possibility of a fragile minority government, weeks of coalition bargaining or a return to the ballot box.
Koza Altin Isletmeleri AS, a Turkish gold miner, jumped 7.6 percent as investors speculated companies associated with U.S.- based Islamic cleric Fetullah Gulen will benefit from weakening of Erdogan’s power.
The ruble strengthened 0.5 versus the dollar, gaining for a second day. While Russian central bank Governor Elvira Nabiullina said on Monday that purchases of foreign currency for reserves will continue for a long time, the Bank of Russia on June 4 bought $131 million, the least since the program started on May 13.