with an increase of 0.29% copper on the metals Exchange closed Thursday d e London (LME), to settle at US $2,65805 pound, value compared to the US $2,65034 on Wednesday, its level lowest since July 11, 2017, and with the $ 2,74832 on Tuesday.
Producers of raw materials shares were trading around its lower valuation in five years on Wednesday, trailed by the decline of the copper at the lowest level in 13 months. That helped push the MSCI emerging markets index to levels close to bear territory, extending losses since a peak in January to 19 percent.
That disappointing earnings from Chinese technology giant Tencent Holdings are helping to stimulate the widespread sale of course. But the turbulent negotiating is giving investors a key lesson: the cycle of negative feedback of old-school between commodities and emerging-market stocks has returned with force.
An example: actions MSCI index and the London Metals Exchange copper contracts are moving ever closer together. The correlation of 52 weeks is close to a maximum of six years.
It is causing a new headache to developing nations affected by the trade war between the U.S. and China, the currency crisis of Turkey and the rally in the dollar.
In a sense, the low commodity parallel and actions represent the return to the investment environment between 2014 and 2016. Back then, the turbulence on the market in China and Russia resulted in a sale generalized, dragging at least 26 countries developing into bearish territory.
Although the basic real subgroup represents less than 8 percent of the classification of emerging markets by weighting in MSCI Inc., its importance to economies not Asian like Russia, South Africa and Brazil should not be underestimated. If China and its neighbors are excluded of the MSCI indices, commodity prices are indeed more important driver to the prospects for stocks and currencies.
The three largest producers of copper in the world are emerging economies, according to the International Copper Study Group. Chile, Peru and China joined the Congo, Zambia, Mexico, and Indonesia in the top 10.
An indicator of the currencies of emerging markets has fallen more than 5 percent this year, but export gains are being offset by tensions in world trade, while the rate of raw materials of Bloomberg is situated near a year minimum.
