Emerging Stocks Fall for Fourth Day on China as Ringgit Slides
Emerging-market stocks fell for a fourth day after Chinese industrial companies posted slower profit growth and Samsung Electronics Co. (005930) dragged technology shares lower. Malaysia’s ringgit weakened to a three-year low.
Anhui Conch Cement Co. (914), China’s largest cement maker, slid to a one-month low. Samsung dropped 1.5 percent in Seoul after Shinyoung Securities Co. cut its share-price forecast. OTP Bank Nyrt., Hungary’s biggest lender, fell the most in a week after a board member sold shares. Iron-ore producer Vale SA paced declines in Brazil’s Ibovespa.
The MSCI Emerging Markets Index sank 0.8 percent to 953.86 in the longest losing streak in a month. Net income at Chinese industrial companies increased 6.3 percent in June from a year earlier, data showed on July 27, down from 15.5 percent in May. The Federal Open Market Committee, which has said it may start paring stimulus should the U.S. economy recover, convenes a two-day meeting tomorrow.
“You’ve got the Fed meeting coming up, and you had the Chinese data coming out weaker than consensus estimates,” Quincy Krosby, a market strategist for Newark, New Jersey-based Prudential Financial Inc., which oversees more than $1 trillion of assets, said by phone. “It conspires to have more caution in markets, particularly the riskier assets.”
The iShares MSCI Emerging Markets Index exchange-traded fund lost 1.3 percent to $39.33. The Chicago Board Options Exchange Emerging Markets ETF Volatility Index, a measure of options prices on the fund and expectations of price swings, gained 8.4 percent to 23.08.
The Shanghai Composite Index (SHCOMP) tumbled 1.7 percent, with benchmark gauges in Indonesia and Thailand dropping at least 1.5 percent. The ringgit and Indian rupee slid 0.6 percent against the dollar as most emerging market currencies tracked by Bloomberg fell.
OTP sank 4.1 percent, the most since July 19, after board member Peter Braun sold 200,000 shares on July 26, according to a statement on the Budapest bourse website. The BUX Index fell 1.7 percent and closed at a three-month low.
OAO Magnit, Russia’s biggest retailer, lost 2.2 percent after Vedomosti newspaper reported that Moscow Mayor Sergei Sobyanin asked sanitary inspectors, police, fire safety control and migration service to investigate its stores in Moscow and “take measures to close them.” The Micex index slipped 0.3 percent. A Magnit spokesman, who asked not to be identified citing company policy, declined to comment on the report.
Aygaz AS, Turkey’s biggest seller of liquefied petroleum gas, lost 1.8 percent in its fourth day of declines, after Taraf newspaper reported it may face penalties over a regulatory probe, without citing anyone.
Brazil’s Ibovespa fell 0.4 percent as Vale, whose top export market is China, declined the most in two weeks.
The IPC Index retreated 1.8 percent in Mexico City as homebuilder Desarrolladora Homex SAB tumbled 32 percent. The country’s exchange suspended trading on builder Corp. Geo SAB today after the stock plunged 25 percent in its 10th day of drops.
The MSCI developing-nations gauge has lost 9.6 percent this year, compared with a 13 percent increase in the MSCI World Index of developed-country stocks. The emerging-markets measure trades at 10 times 12-month projected profit, compared with the MSCI World’s 13.8 times, data compiled by Bloomberg show.
The Hang Seng China Enterprises Index of mainland companies listed in Hong Kong fell 1.2 percent, the most in two weeks. Anhui Conch slid 3 percent, while Jiangxi Copper Co., the nation’s No. 1 producer of the industrial commodity, retreated 2.2 percent.
Industrial & Commercial Bank of China Ltd. lost 1 percent and Bank of China Ltd. declined 1.2 percent. The State Council, under Premier Li Keqiang, ordered the review of government debt, the National Audit Office said in a statement yesterday. The office suspended other projects for this “urgent” work requested on July 26 and will send staff to provinces and cities this week, People’s Daily reported yesterday on its website, citing people it didn’t identify.
“The audit may bring concerns to investors that local governments may have amassed a huge amount of debt, which will provide a big drag on the economy and government-led infrastructure construction,” said Li Jun, a strategist at Central China Securities Co. in Shanghai.
Gauges of technology and industrial companies in the MSCI Emerging Markets Index lost at least 1.1 percent, the most among 10 industry groups. Samsung, the world’s biggest smartphone maker, fell the most since July 18, dragging the benchmark Kospi index down by 0.6 percent.
Hyundai Development Co. (012630) slumped 11 percent in Seoul, the largest drop in the MSCI Emerging Markets Index, after reporting a quarterly loss and as Samsung Securities Co. reduced its share-price forecast.
Indian lenders retreated after the chairman of the nation’s biggest bank said interest rates may rise. The S&P BSE Sensex Index (SENSEX) fell for a fourth day, the longest losing streak in two months, dropping 0.8 percent. HDFC Bank Ltd. lost 1.8 percent in Mumbai and State Bank of India, the nation’s biggest bank, retreated 1.4 percent to the lowest close since Jan. 11, 2012.
India’s central bank is set to raise the benchmark repurchase rate and cash reserve ratio at its meeting tomorrow in a move to defend the rupee, State Bank of India (SBIN) Chairman Pratip Chaudhuri said in an interview to Bloomberg TV India.
The extra yield investors demand to own emerging-market debt over U.S. Treasuries was unchanged at 315 basis points, according to JPMorgan Chase & Co.’s EMBI Global Diversified Index.
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