Malaysian Stocks, Bonds Retreat as China Spurs Global Selloff

  • Ringgit pares loss after dropping to three-month low
  • Malaysian November exports, trade surplus miss forecasts

Malaysian stocks and bonds declined after China cut its currency fixing for an eighth day, triggering a selloff in emerging-market assets.

The yuan slumped after China reduced its reference rate by the most since a devaluation in August, spurring a more than 7 percent drop in the CSI 300 index of Chinese shares and sparking an early trading halt for a second time this week. A slide in Brent crude pushed the ringgit to a three-month low before the currency pared its loss late in Asia.

The FTSE Bursa Malaysia KLCI Index fell 0.8 percent to close at 1,655.13 in Kuala Lumpur. The yield on 10-year government notes rose one basis point to 4.23 percent, prices from Bursa Malaysia show.

“The unstable China economy and markets are the main drivers for risk-off,” said Masashi Murata, vice president at Brown Brothers Harriman & Co. in Tokyo. “Lower oil prices lead to a weak ringgit too.”

China Market

The ringgit closed little changed at 4.3940 a dollar after slipping as much as 0.8 percent as Brent dropped to the lowest in more than 11 years, damping the outlook for Asia’s only major net oil exporter. The currency has weakened 2.3 percent this year, after its worst annual performance since 1997.

The MSCI Emerging Markets Index of stocks decreased 2.5 percent to its lowest level since 2009 and a gauge of 20 developing-nation currencies fell to a record.

The offshore yuan traded in Hong Kong also reversed an earlier drop on suspected central bank intervention, while the onshore spot rate depreciated to a five-year low. China’s central bank is considering new measures to prevent high volatility in the yuan exchange rate in the short term and will continue direct intervention, people familiar with the matter said.

“There’s still a lot of uncertainty around China,” said Divya Devesh, Standard Chartered Plc’s Asian currency strategist in Singapore. “It’s a bit of stabilization that we’ve seen in China in the afternoon.”

Malaysian trade data missed estimates. Exports rose 6.3 percent in November from a year earlier versus the previous month’s 16.7 percent advance, and the trade surplus narrowed to 10.24 billion ringgit from a revised 12.17 billion ringgit in October. Economists in Bloomberg surveys had estimated figures of 12 percent and 12 billion ringgit.

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