Emerging-market stocks headed for their steepest monthly loss in more than three years, as Shanghai shares declined and Federal Reserve officials signaled they’re prepared to raise interest rates. Russia’s ruble halted two days of gains.
CRRC Corp., a Chinese train-equipment maker, slumped 5.9 percent in Hong Kong after its first-half earnings disappointed.Citic Securities Co. slid to a three-month low after the Xinhua News Agency reported its executives were detained on suspicion of insider trading. The Shanghai Composite Index extended losses in August to 12 percent. The ruble weakened 2.6 percent versus the dollar, while the South African rand slid to a record low. The won posted a fourth monthly drop after weak South Korean manufacturing data.
The MSCI Emerging Markets Index lost 0.3 percent to 817.63 at 9:13 a.m. in London, extending the retreat in August to 9.3 percent, its worst month since May 2012. Fed Vice ChairmanStanley Fischer kept the door open to an interest-rate increase next month, saying there is “good reason” to believe inflation will accelerate. Chinese stocks extended their monthly slide as traders weighed the level of state support.
“Uncertainty over the Fed’s interest-rate increase will continue to create volatility in the financial markets,” Rakpong Chaisuparakul, an investment strategist at KGI Securities (Thailand) Pcl, said by phone in Bangkok. “China’s weak economic recovery will hurt the growth of other developing countries.”
Financial markets in the Philippines and Malaysia were closed for a holiday.
The MSCI emerging-markets index trades at 10.7 times projected 12-month earnings, compared with a multiple of 15.3 for the MSCI World Index, according to data compiled by Bloomberg. Eight of 10 industry groups in the developing-nation gauge dropped, led by energy and utility companies.
China Shares
CRRC, which was formed by a merger of state-owned CSR Corp. and China CNR Corp. in May, declined for a second day after reporting net income on Friday that Barclays Pcl analyst Yang Song described as a disappointment. Hong Kong’s Hang Seng China Enterprises Index slipped 0.1 percent.
Citic Securities slumped 5 percent in Hong Kong after four executives at China’s largest brokerage, a journalist at business magazine Caijing and a staff member at the China Securities Regulatory Commission confessed to alleged stock-related crimes, Xinhua said.
The ruble fell for the first time in three days and the Micex Index climbed 0.2 percent, heading for a fifth day of gains. The rand lost 0.2 percent, set for a third day of declines, and the Turkish lira added 0.1 percent.
While the Fed’s Fischer was careful to announce that he wasn’t signaling an impending rate increase, his remarks suggested a move hasn’t been ruled out when the Federal Open Market Committee gathers in Washington Sept. 16-17.
“As long as we are in the waiting game and uncertainty is prolonged, emerging-market currencies will be unable to rally on a sustained basis,” Societe Generale SA analysts Jason Daw and Frances Cheung wrote in a report dated Monday.
The won slumped 0.8 percent on Monday, capping a fourth month of declines, its longest run of monthly losses since 2008. It weakened as industrial production in Asia’s fourth-largest economy fell 3.3 percent in July from a year earlier, official data showed Monday. The Kospi index added 0.2 percent.
The S&P BSE Sensex slid 0.2 percent in Mumbai. Official data due on Monday will probably show that India’s economy grew 7.4 percent in the quarter ended June 30, versus 7.5 percent in the preceding three months, according to the median of 27 analyst estimates in a Bloomberg survey.
Taiwan’s Taiex index jumped 1.9 percent, a fifth day of gains. Indonesia’s benchmark equity index climbed 1.3 percent, while the rupiah and India’s rupee fell at least 0.3 percent.
source: Bloomberg
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