Emerging Stocks Decline for Second Day on Bank, Economic Slowdown Concerns
Sept. 7 (Bloomberg) -- Uri Landesman, president of Platinum Partners LLP, talks about the outlook for the U.S. equity market and his investment strategy. Landesman speaks with Pimm Fox on Bloomberg Television's "Taking Stock." (Source: Bloomberg)
Emerging-market stocks fell for a second day as investors speculated that banks need more capital and export growth will slow on reduced demand from the U.S.
The MSCI Emerging Markets Index slipped 0.5 percent to 1,001.57 at 2 p.m. in Hong Kong, extending its drop from a four- week high on Sept. 6. The MSCI China Index tumbled 1.7 percent, the most in a month, as China Mobile Ltd. headed for its biggest decline since August 2009. Hynix Semiconductor Inc. sank to the lowest level this year and paced losses in technology companies after UBS AG downgraded the stock.
Banks led a retreat in global equities yesterday on concern European lenders will require more capital to compensate for holdings of bonds in the region’s weakest economies. Reports that Chinese regulators will force lenders to boost loan-loss reserves are negative for mid-sized banks, Morgan Stanley said. The Federal Reserve releases its Beige Book business survey today, which may add to signs the U.S. economy is slowing.
“I still see a lot of risk aversion in the market,” Uri Landesman, president of New York-based hedge fund firm Platinum Management LLC, said in an interview on Bloomberg Television. “The chances for bad economic data the rest of the month are high.”
The 21-country MSCI emerging index has declined 4.4 percent from this year’s high on April 15 as signs of slowing growth from China to the U.S. and spending cuts by indebted European governments overshadowed surging earnings. Companies in the gauge posted an average second-quarter profit gain of 32 percent, according to data compiled by Bloomberg.
China Mobile Sinks
The MSCI China index of Hong Kong-traded shares dropped for the first time in six days. China Citic Bank Corp. fell 3.6 percent and China Merchants Bank Co. declined 2.9 percent.
China’s banking regulator is drafting a plan requiring banks to maintain loan-loss reserves equivalent to 2.5 percent of total lending, according to Guosen Securities Co. The regulation may go into effect next year, Guosen analyst Qiu Zhicheng wrote in a note to clients yesterday, citing an unidentified China Banking Regulatory Commission official speaking at a financial conference hosted by the securities firm.
The rules would reduce profitability on pre-provision operating lines, Morgan Stanley said.
Property Curbs
China Vanke Co., the nation’s biggest real estate developer, retreated 2.7 percent in Shenzhen. The government may introduce measures to curb property prices that include stopping loans to real estate developers, compulsory lowering of home prices and a ban on third-home purchases, the 21st Century Business Herald reported today, citing an unidentified person close to the Ministry of Housing and Urban-Rural Development.
China Mobile, the world’s biggest phone carrier by market value, declined 3.9 percent in Hong Kong trading after Vodafone Group Plc said it’s selling its 3.2 percent stake in the company.
The Shanghai Composite Index, which tracks the bigger of China’s stock exchanges traded mainly by local investors, lost 0.5 percent.
South Korea’s Kospi Index declined 0.6 percent. Hynix, the world’s second-largest computer-memory chipmaker, fell 3.7 percent after UBS downgraded the shares to “sell” from “neutral,” citing weaker-than-estimated personal computer demand.
India’s Bombay Stock Exchange Sensitive Index was little changed, while Taiwan’s Taiex Index slipped 0.4 percent and Thailand’s SET Index dropped 0.6 percent.
The extra yield investors demand to own emerging-market debt over U.S. Treasuries rose 1 basis point to 2.92 percentage points, the highest level in five days, according to JPMorgan Chase & Co.’s EMBI+ Index.
To contact the reporter on this story: Michael Patterson in Hong Kong at mpatterson10@bloomberg.net.
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