Emerging-market stocks drop to two-week low as China selloff roils Asia
JAKARTA, Nov 30 — Emerging-market stocks dropped to a two-week low and a gauge of developing-nation currencies slid towards a record following a selloff in Chinese equities.
All 10 industry gauges on the MSCI Emerging Markets Index fell after a regulatory probe into some of China’s largest brokerages sparked the steepest slump in Shanghai shares in three months on Friday. Indonesia’s rupiah, South Korea’s won and Russia’s rouble led declines in emerging currencies, weakening for a fourth day. The offshore yuan rebounded from an early loss on suspected central bank intervention before an International Monetary Fund vote today on whether to add China’s currency to its reserves basket.
Samsung Electronics Co. was the biggest drag on the equities benchmark, which headed for its worst month since August. The Kospi index fell the most since September after a report showed South Korea’s October industrial production missed estimates.
China’s stocks erased steep losses in the last hour of trading, led by financial companies, as a second day of wild price swings tested the government’s plan to trim support for the equity market.
“Concerns over slowing growth in China and some parts of the global economy still persist and may last through the first half of 2016,” said Agus Yanuar, president director at PT Samual Aset Manajemen in Jakarta. “Investors should maintain defensive positions until we can see some improvements in leading indicators.”
Stocks
The MSCI Emerging fell 0.9 per cent to 818.88 as of 4:48 pm in Hong Kong and has dropped 3.4 per cent in November and more than 14 per cent in 2015.
The gauge is valued at 11 times of its 12-month estimated earnings, according to data compiled by Bloomberg. That compares with this year’s 0.7 per cent retreat in the MSCI World Index, which was traded at 16 times.
Kumba Iron Ore dropped 5.5 per cent in Johannesburg, leading declines among material stocks.
Samsung Electronics fell 3.2 per cent. The company’s vice chairman Lee Jae Yong is unlikely to be promoted to chairman, Chosun Ilbo newspaper reported, citing an unidentified Samsung official.
The Shanghai Composite Index climbed 0.3 per cent, erasing a loss of as much as 3.2 per cent, as a gauge of volatility traded near its highest level in two months. Bank of China Ltd. jumped the most in three months to pace gains for lenders, while Haitong Securities Co. fell 8.9 per cent after saying yesterday it was being probed by China Securities Regulatory Commission for alleged margin-financing violations.
The Hang Seng China Enterprises Index of mainland stocks listed in Hong Kong fell 0.7 per cent. South Korea’s Kospi index retreated 1.8 per cent and Taiwan’s Taiex Index dropped 0.9 per cent. The Jakarta Composite Index weakened 0.9 per cent and the FTSE Bursa Malaysia KLCI dropped 0.6 per cent.
Dubai’s DFM General Index retreated 0.5 per cent as crude oil headed for its largest monthly drop since July after Iran signalled the Organisation of Petroleum Exporting Countries won’t reduce its production target at a meeting this week.
Russia’s Micex Index fell 0.1 per cent while the rouble retreated 0.3 per cent. Equities gauge in Turkey rose 0.7 per cent and the lira strengthened 0.4 per cent as the government said the nation’s trade deficit narrowed in October.
Currencies
The gauge of developing-nation currencies fell towards an all-time low reached in late September as demand for the dollar strengthened on speculation Europe will expand its stimulus this week, deepening a divergence from the US, which is poised to raise interest rates next month.
The probability the Federal Reserve will increase its benchmark rate by its December meeting is 74 per cent, according to futures data compiled by Bloomberg. The Bloomberg Dollar Spot Index traded at its highest in data going back to December 2004.
“Market players tend to prefer dollars over rupiah or other Asian currencies as they seek a safe-haven currency ahead of the last Fed meeting of the year,” said Trian Fatria, a treasury research analyst at PT Bank Negara Indonesia in Jakarta.
Indonesia’s rupiah dropped 0.5 per cent and touched a seven-week low, the won declined 0.4 per cent and Malaysia’s ringgit fell 0.1 per cent.
The offshore yuan, which is freely traded in Hong Kong, surged to a 0.4 per cent advance against the greenback after declining as much as 0.2 per cent. This came after the discount to the onshore price widened to the most since early September, hampering China’s efforts to fulfill the IMF’s desire for one rate at home and abroad.
The onshore rate in Shanghai fell 0.05 per cent to 6.3981 a dollar, China Foreign Exchange Trade System prices show. — Bloomberg
