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(Bloomberg) — Emerging-market stocks headed for the longest run of losses in almost three months as Greece’s talks with its creditors stalled, while Russia to Indonesia joined a global bond rout. The ruble led currencies lower.
The MSCI Emerging Markets Index dropped 0.7 percent to 989.11 at 12:34 p.m. in London, falling for a ninth day. Shares in Turkey ended a two-day rally before Sunday’s general elections, and Taiwanese equities slumped to the lowest since January as foreign investors became net sellers. The yield on Russian five-year bonds jumped to the highest since April, while Indonesian government bonds were hit the hardest in Asia. The ruble weakened 1.4 percent against the dollar as a gauge of developing-nation currencies declined for a second day.

Top-level talks failed to end the impasse between Greece and its creditors as Prime Minister Alexis Tsipras insisted any accord should avoid spending cuts and tax increases. A rout in global bonds gathered pace after European Central Bank President Mario Draghi forecast higher inflation and market volatility. The U.S. economy expanded in the past two months, rebounding from a drop in the first quarter, a Federal Reserve report showed.

“European bonds have sold off and this volatility is impacting currency and equity markets worldwide,” Michael Wang, a London-based strategist at Amiya Capital LLP, said by e-mail. “The better inflation data in Europe and the largely better economic data in the U.S. are also helping to push bond yields up. Uncertainty about the Greek negotiations is keeping risk assets under pressure.”

U.S. Growth

Four of 12 Fed districts reported “moderate” growth, and three described their expansion as “modest,” according to the Beige Book released Wednesday in Washington. The report offers central-bank officials, who next meet June 16-17, anecdotal evidence about the state of the economy as they consider when to raise interest rates for the first time since 2006.
All 10 industry groups in the MSCI Emerging Markets Index fell, led by energy and telecommunication services companies. The developing-nation index trades at 12 times the projected earnings of its members, compared with a multiple of 16.8 for the MSCI World Index of developed-nation stocks, according to data compiled by Bloomberg.

The Borsa Istanbul 100 Index dropped 1.4 percent, after posting the biggest two-day increase since March 17. Campaigning intensified for Sunday’s parliamentary elections, which surveys have indicated would be the tightest race in a dozen years. The ruling AK party faces Peoples’ Democracy Party, which hopes to enter parliament for the first time and prevent President Recep Tayyip Erdogan’s lawmakers from winning a majority.

Taiwan’s Taiex Index slumped 2.2 percent to the lowest level since Jan. 21. Foreign investors sold a net $453 million of stocks in the first three days of the week. Hon Hai Precision Industry Co, the manufacturer for Apple Inc.’s iPhones, lost 2.6 percent.

Shanghai Rebounds

In China, the Shanghai Composite Index gained 0.8 percent. The gauge had earlier fallen as much as 5.4 percent on news that a brokerage has suspended margin financing for investors in smaller companies. The Hang Seng China Enterprises Index of mainland shares in Hong Kong increased 0.1 percent, also rebounding from a 2.4 percent decline earlier on Thursday.
Record growth in margin debt has helped add more than $4 trillion to the value of mainland Chinese shares this year. The rally has raised concern among some investors that valuations are reaching excessive levels. Bill Gross wrote on Twitter on Wednesday that shares on the technology-heavy Shenzhen bourse are the next big trade for short sellers.

Samsung SDS Co. tumbled 7.3 percent in Seoul, the most in nearly three months, after Samsung Electronics Co. said it has no plans for a merger.

Russian government bonds fell for a second day, pushing five-year yields up 19 basis points. Indonesia’s 10-year government bond yield climbed 22 basis points. The global bond market has erased its gains for the year as traders have been caught off-guard by signs the worldwide economy may avoid mass deflation.

The ruble tumbled to 55.0420 per dollar, the lowest in almost two months. The rand slid to the weakest level since March 16. The won depreciated 0.8 percent, dropping for an eighth day in nine.
The Bloomberg gauge of 20 emerging-market currencies slid 0.2 percent, heading for a third week of losses.
The premium investors demand to hold emerging-market debt over U.S. Treasuries widened one basis point to 331, according to JPMorgan Chase & Co. indexes.

To contact the reporters on this story: Lyubov Pronina in London at lpronina@bloomberg.net; Choong En Han in Kuala Lumpur at echoong6@bloomberg.net To contact the editors responsible for this story: Daliah Merzaban at dmerzaban@bloomberg.net Srinivasan Sivabalan, Zahra Hankir