Related News:
Emerging-Market Stocks Drop Most in Three Months on Europe, China Concerns
Emerging-market stocks fell the most in six days and currencies weakened on concern China’s measures to curb real-estate speculation and spending cuts by indebted European governments will slow economic growth.
The MSCI Emerging Markets Index lost 2.1 percent to 939.74 as of 5 p.m. in New York, its biggest retreat since May 7. The Shanghai Composite Index tumbled 5.1 percent, the most since August 2009 and Brazil’s Bovespa index fell for a third day. Developing-nations currencies weakened against the dollar with the South Korean won dropping 2 percent.
China’s Shanghai index sank to the lowest level in a year after Premier Wen Jiabao warned the government will “decisively” contain gains in home prices and the Ministry of Commerce said the euro’s decline is pressuring exporters. All 10 industry groups in the MSCI index fell more than 1 percent as European finance ministers, meeting in Brussels today, are under pressure to show they can reduce deficits fast enough to satisfy bondholders after agreeing to a $1 trillion financial lifeline for the region last week.
“The concern now is moving from how much it’s going to cost to the effect on growth,” Markus Rosgen, Citigroup Inc.’s chief Asian strategist in Hong Kong, said in a Bloomberg Television interview. “In Asia, there are clearly some headwinds.”
The MSCI emerging index has dropped 10 percent from this year’s peak on April 15 as China stepped up efforts to cool its property market and investors speculated austerity measures by European nations including Greece and Spain would cut demand for exports. The gauge is still up 125 percent from its 2008 low after governments around the world committed about $12 trillion to revive the global economy.
Yield Spreads Rise
The extra yield investors demand to own emerging-market debt over U.S. Treasuries narrowed three basis points to 2.93 percentage points, according to JPMorgan Chase & Co.’s EMBI+ Index.
China Vanke Co., the nation’s largest property developer by market value, dropped 5.3 percent. Guangzhou Shipyard International Co., which got more than half of last year’s sales from Europe, tumbled 7.3 percent. Yuan forwards had the biggest decline in seven days on speculation China will delay appreciation of its currency to bolster exports.
Thai stocks slumped the most in a week, the baht declined and credit risk climbed after at least 36 people were killed in fighting between the military and anti-government protesters. The benchmark SET Index of shares retreated 2 percent and credit-default swaps linked to Thailand jumped 23 basis points to 170, according to BNP Paribas SA.
Thai Debt Rating
The violence may not be “containable” if the government fails to restore order and convince protesters to resume talks, according to Moody’s Investors Service, which said domestic confidence will be crucial in determining the Thai debt rating.
Romania’s BET Index lost 6.7 percent, the most among benchmark equity indexes worldwide, while the Hungarian BUX Index retreated 0.4 percent.
The euro rose for the first time in five days, recovering from its lowest level in more than four years against the dollar. Spain unveiled on May 14 the biggest cuts in at least 30 years and Portugal followed a day later, pledging to slash wages and raise taxes. Italian officials said yesterday that the government may make an extraordinary reduction in public spending, and France is slated to submit its latest tax and spending plans to the commission this week.
Brazil’s Bovespa stock index dropped 0.9 percent to the lowest level since Feb. 5. Vale SA, the world’s biggest iron-ore miner whose top export market is China, tumbled 1.8 percent, the largest drag on the index. Steel producer Gerdau SA fell 2.7 percent.
To contact the reporters on this story: Shiyin Chen in Singapore at schen37@bloomberg.net; Michael Patterson in London at mpatterson10@bloomberg.net.
Rate These Stories
Rate this Page