Bloomberg News

Emerging Stocks Fall First Day in Six Before U.S. Jobs Report

September 02, 2011

Sept. 2 (Bloomberg) -- Emerging stocks fell the first day in six before U.S. jobs data that may show a jobless rate over 9 percent and as a stronger Swiss franc sparked concern Polish borrowers may default on foreign-currency loans.

The MSCI Emerging Markets Index dropped 0.8 percent to 1,030.16 at 12:19 p.m. in London, paring the gauge’s five-day gain to 5.6 percent, the biggest weekly advance in two years. The Shanghai Composite Index lost 1.1 percent. Polish shares were set for the steepest drop in two weeks as the zloty depreciated versus the Swiss franc. Stocks in Moscow slid by 1.7 percent as oil fell.

The Labor Department report today may show non-farm payrolls climbed by 68,000 in August after a 117,000 increase in July, according to the median forecast of 86 economists surveyed by Bloomberg News. The unemployment rate will hold at 9.1 percent, according to the median survey estimate.

“After such a strong run this week, equity markets face a bout of profit taking today,” Chris Weafer, chief strategist at Troika Dialog in Moscow, wrote in an e-mail. “Investors everywhere are more inclined to wait for the U.S. payroll data later today and to stay sidelined ahead of the long weekend in that market,”

The WIG20 Index sank 1.9 percent in Warsaw. The zloty slumped as much as 3.3 percent against the Swiss franc, its fourth day of losses. Franc-denominated mortgages totaled 151.8 billion zloty ($51.7 billion) in June, accounting for almost 53 percent of all home loans in Poland, according to the country’s financial regulator.

Polish Banks

Getin Holding SA, the financial-services group controlled by Polish billionaire Leszek Czarnecki, declined 4.2 percent, headed for the biggest two-day drop in more than three weeks. Bank Pekao SA, majority-owned by UniCredit SpA, slid 3.4 percent and PKO Bank Polski SA, the country’s biggest bank, retreated 2.8 percent.

The forint weakened 3.2 percent versus the Swiss currency. Turkey’s lira depreciated 1.2 percent versus the dollar and the ruble slid 0.3 percent to the U.S. currency as oil fell.

The FTSE/JSE Africa All Share Index slid 1.2 percent in Johannesburg as the prices of copper and other industrial metals sank in London trading..

Benchmark indexes in Turkey, India and Malaysia rose after they reopened following holidays. The ISE National 100 Index gained 3 percent in Istanbul after Citigroup Inc. raised Turkish stocks to “overweight” from “neutral.”

Slowing Withdrawals

Emerging-equity fund outflows slowed for the third week, Citigroup said. Funds investing in developing-nation stocks reported withdrawals of $600 million of outflows in the week ended Aug. 31, analysts led by Markus Rosgen said in a report today, citing figures compiled by EPFR Global. That compares with “peak” weekly outflows of $7.7 billion during the past month’s stock market rout, the report said.

The extra yield investors demand to own emerging-market debt over U.S. Treasuries fell one basis point, or 0.01 percentage point, to 362, according to JPMorgan’s EMBI Global Index.

The Markit iTraxx SovX CEEMEA Index of eastern European, Middle East and Africa credit-default swaps jumped seven basis points to 257.

--With assistance from Shani Raja in Sydney. Editors: Linda Shen, Stephen Kirkland

To contact the reporters on this story: Weiyi Lim in Singapore at wlim26@bloomberg.net; Jason Webb in London at jwebb25@bloomberg.net.

To contact the editor responsible for this story: Darren Boey at dboey@bloomberg.net


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