Emerging-market stocks headed for the longest weekly slump in six months as Chinese money-market rates rebounded and a cut in U.S. stimulus spurred concerns about capital outflows from developing nations. The Thai baht and Indonesia’s rupiah weakened.
Ping An Insurance (Group) Co. (2318) led financial companies lower in Hong Kong, while Huaxia Bank Co. slid 3.2 percent in Shanghai as Chinese shares headed for the longest losing streak in almost two decades. PT Astra International paced losses in Indonesia. The baht, rupiah and Malaysia’s ringgit dropped at least 0.3 percent versus the dollar.
The MSCI Emerging Markets Index fell 0.3 percent to 987.37 as of 2:27 p.m. in Hong Kong, headed for a five-week low. The gauge has lost 0.3 percent this week, its third straight weekly slide. China’s seven-day repurchase rate increased to the highest level since a record cash crunch in June even after the central bank injected funds. The U.S. Federal Reserve said Dec. 18 it will reduce a record bond buying program by $10 billion, while pledging to keep interest rates near zero.
“The short-term rates rising in China is a very dangerous situation and not conducive for equities,” Alex Mathews, head of research at Geojit BNP Paribas Financial Services Ltd., said from Kollam, South India today. “The dollar is strengthening and the emerging market currencies are weakening as a result. We expect more tapering by the Fed in the months to come as the U.S. economy gets stronger.”
The MSCI Emerging Markets Index has lost 6.5 percent this year and trades at 10.3 times projected 12-month earnings. The MSCI World Index has surged 21 percent in 2013 and is valued at a multiple of 14.5, data compiled by Bloomberg show.
All 10 industry groups in the MSCI emerging markets gauge dropped, led by financial and utility companies. Ping An Insurance (Group) Co. slid 4.2 percent, the most since July 2012, while the Hang Seng China Enterprises Index lost 1.4 percent to the lowest level since Nov. 14.
Huaxia Bank dropped for a second day, poised for the lowest close in five weeks. The Shanghai Composite Index sank 1.7 percent, its ninth day of declines, with volumes 23 percent below the 30-day average. The gauge is headed for the longest stretch of losses since December 1994 as targeted fund injections by the central bank failed to alleviate the worst cash crunch since June.
The seven-day repurchase rate, a gauge of liquidity in the financial system, increased 100 basis points to a six-month high of 7.60 percent in Shanghai, according to a daily fixing by the National Interbank Funding Center.
The People’s Bank of China conducted short-term liquidity operations recently, it said on its microblog yesterday, without giving details of the recipients, amount or rate charged for the financing. The monetary authority injected 200 billion yuan ($32.9 billion), online financial news provider Netease reported, citing a person it didn’t identify.
The Jakarta Composite Index retreated for the first time in four days, losing 1.1 percent, as the rupiah weakened to a five-year low. Astra, Indonesia’s biggest automotive retailer, dropped 1.5 percent, snapping a three-day advance.
The Philippine Stock Exchange Index sank 1.3 percent, its second day of declines. Thailand’s SET Index slid 0.9 percent, while the baht was poised for its biggest weekly retreat in four months. The currency touched a three-year low today before anti-government protesters rally on the streets of Bangkok to attract support ahead of a major demonstration planned for Dec. 22.
The ringgit and baht led losses among Asian currencies this week. The Malaysian currency headed for a ninth straight weekly decline, its longest losing streak since November 2005.
Global funds pulled $259 million from Thai, Philippine and Vietnamese stocks in the first four days of the week, according to exchange data.
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