Emerging Stocks Fall for First Time in Five Days on Slowing China Output

Emerging-market stocks fell for the first time in five days after a Chinese official said industrial output growth may slow, overshadowing a $50 billion plan by U.S. President Barack Obama to bolster the world’s largest economy.

The MSCI Emerging Markets Index slipped 0.1 percent to 1,010.34 at 12:39 p.m. in Hong Kong, snapping a 4.3 percent rally during the past four days that had sent the gauge to a four-week high. China’s Shanghai Composite Index lost 0.4 percent, while the South Korean won weakened 0.4 percent against the dollar to lead declines in Asian currencies.

Shanghai Industrial Holdings Ltd. and China Shenhua Energy Co. slid after Xin Guobin, an official with the nation’s industry ministry, said in Beijing today that output growth may slow to about 10 percent in the second half. Amorepacific Corp., the Seoul-based cosmetics maker, sank 3.9 percent on a downgrade by BNP Paribas SA. Steelmakers rallied after the metal price in China, the biggest consumer of steel, jumped on production cuts.

“Although we don’t have the risk of a double-dip for China’s economy, a deceleration of the economic growth is inevitable,” said Wei Wei, an analyst at West China Securities Co.

The MSCI emerging index has slipped 3.6 percent from this year’s peak on April 15 amid concern that a slowdown in China’s economy and stagnant U.S. jobs growth will derail the global recovery. The 21-country gauge is still up 2.1 percent this year.

Won, Baht

The Shanghai Composite Index dropped the most in four days, extending this year’s decline to 18 percent. China Shenhua Energy, a unit of the nation’s largest coal producer, slid 1.2 percent.

Shanghai Industrial retreated 1.6 percent in Hong Kong trading. Industrial companies declined the most among 10 industries in the MSCI emerging index, losing 0.4 percent.

South Korea’s won retreated from its strongest level in four weeks after policy makers were suspected of buying dollars in the foreign-exchange market yesterday, said Ha Joon Woo, a currency dealer at Daegu Bank in Seoul.

The Bloomberg-JPMorgan Asia Dollar Index fell for the first time in five days, retreating 0.1 percent. Thailand’s baht and India’s rupee both depreciated 0.2 percent against the U.S. currency.

Maanshan Iron & Steel Co. jumped 7 percent in Shanghai. Posco, the world’s third-biggest steelmaker, rose 5.1 percent in Seoul, while Hyundai Steel Co. climbed 4.6 percent and Dongkuk Steel Mill Co. added 3.3 percent.

Obama proposed spending at least $50 billion to rebuild 150,000 miles (241,400 kilometers) of roads, construct and maintain 4,000 miles of rail and overhaul 150 miles of runways.

The rally for China’s steelmakers and metal prices has “further upside” as the Chinese government introduces stricter policies to reduce energy consumption by the end of the year, JPMorgan Chase & Co. said in a report.

To contact the reporter on this story: Michael Patterson in Hong Kong at mpatterson10@bloomberg.net.

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