Emerging-Market Stocks Fall Most in 8 Months; Gazprom Declines

By Fabio Alves

Sept. 16 (Bloomberg) -- Emerging-market stocks tumbled for a second day, sending the benchmark index to its biggest decline in almost eight months, as mounting credit losses and a surge in banks' borrowing costs prompted investors to sell riskier assets.

Every European and Asian emerging market in MSCI indexes except Indonesia retreated. Russia's Micex Index fell the most since Bloomberg began tracking the measure in May 2001, led by financial companies OAO Sberbank and OAO VTB Group, before trading was suspended. South Korea's Kospi index dropped the most in 13 months, while Czech's stocks had the biggest decline since July 2001.

The MSCI Emerging Markets Index fell 6 percent to 776.02 at 9:12 a.m. New York time, the biggest tumble since Jan. 21. Before today, the measure lost 34 percent in 2008, compared with a 19 percent decline for the Standard & Poor's 500 Index. A gauge of energy stocks in the emerging markets index slipped 7.4 percent to 668.36, the lowest since March 2007.

Russia's Micex index plummeted 17 percent to 890.29, dragged down by a 19 percent plunge in Sberbank and a 14 percent decrease in OAO Gazprom. Korea's Kospi index fell 6.1 percent, while Czech's PX index slumped 6.5 percent.

The cost of insuring bonds in emerging markets surged. Argentina's five-year credit-default swaps rose above 1,000 basis points as concern New York-based American International Group Inc. may collapse eroded demand for all but the safest investments.

To contact the reporters for this story: Fabio Alves in New York at Falves3@bloomberg.net.