Emerging Stocks Head for Monthly Loss on China, Europe’s Debt

Most emerging-market stocks fell, with the benchmark index heading toward its first monthly loss since August, amid speculation China will increase interest rates and that Europe’s debt crisis will spread.

The MSCI Emerging Markets Index was little changed at 1,080.50 as of 3:05 p.m. Jakarta time. The gauge is set for a 2.3 percent drop this month. The Shanghai Composite Index, which tracks the bigger of China’s stock exchanges, fell 1.6 percent.

China Construction Bank Corp. fell after an economist said China needs to raise borrowing costs by another 200 basis points to curb inflation. The Bombay Stock Exchange’s Sensitive Index rose 0.6 percent after India’s gross domestic product in the September quarter increased more than forecast. The rupee and the Philippine peso led declines among Asian currencies this month.

“The possibility of China raising interest rates in the short term seems much more possible, and that’s triggering the selling pressure,” said Castor Pang, Hong Kong-based research director at Cinda International Holdings Ltd. “Concerns about the European debt crisis are continuing to deteriorate confidence in the market, although it won’t trigger a sell off.”

China Construction Bank declined 1.7 percent in Shanghai trading, while Industrial and Commercial Bank of China Ltd. lost 2.1 percent, pacing losses for Chinese lenders.

China may see inflation quicken this month from October’s price rises driven by food costs, making it “almost certain” that inflation will top 3 percent for the full year, Sheng Songcheng, former head of the central bank’s Shenyang branch, wrote in a commentary in the official Financial News.

Interest Rates

The government needs to raise interest rates by another 200 basis points to curb inflation, Zhong Jiyin, an economist with the Chinese Academy of Social Sciences, wrote in a commentary in the China Daily today.

DLF Ltd., India’s biggest developer, surged 5.6 percent. India’s gross domestic product rose 8.9 percent in the three months through September from a year earlier, matching the revised pace of growth in the previous quarter, the Central Statistical Organisation said in a statement in New Delhi today. That was more than the 8.2 percent median estimate of 30 economists in a Bloomberg News survey.

Global stocks extended losses into a fourth week as Ireland’s 85 billion-euro ($113 billion) bailout failed to ease concern the region’s most-indebted nations will need further aid.

‘Big Elephant’

Ireland, swamped by the bursting of a decade-long real- estate bubble and unemployment approaching 14 percent, became the second country to tap European assistance. Spain is the “big elephant” in the European debt crisis because there may not be enough money to bail out the Iberian nation, said Nouriel Roubini, chairman of Roubini Global Economics who predicted the global economic slump of 2008.

South Korea’s Hynix Semiconductor Inc. slumped 5.2 percent, the most in three months. KTB Securities Co. cut its share-price estimate, saying the chipmaker will probably post operating losses through the end of next year’s third quarter. Taiwan Semiconductor Manufacturing Co., the world’s biggest custom manufacturer of chips, slid 1.4 percent after the Commercial Times reported the company will raise salaries next year.

Overseas investors were net sellers of equities this month in Indonesia, the Philippines and Thailand, according to exchange data. The Bloomberg-JPMorgan Asia Dollar Index slumped 1.1 percent in November, the biggest monthly drop since May.

South Korea’s won fell 0.6 percent today, completing its biggest monthly loss since May. The Philippine peso weakened 0.1 percent, having declined 2.5 percent in November.

“Everyone’s still paring back risk as there’s a lot of uncertainty in the world right now, mostly around funding and exposure to Spain and peripheral Europe,” said Stuart Oakley, the Singapore-based head of emerging markets foreign exchange for Asia at Royal Bank of Scotland Plc. “We are still seeing better buying of dollars right now.”

To contact the reporter on this story: Berni Moestafa in Jakarta at bmoestafa@bloomberg.net

To contact the editor responsible for this story: Darren Boey at dboey@bloomberg.net

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