Bloomberg News

Emerging Stocks Snap Six-Day Advance on Europe, Growth Concerns

December 07, 2011

Dec. 6 (Bloomberg) -- Emerging-market stocks fell for the first time in seven days as Standard & Poor’s put 15 European nations on watch for potential ratings downgrades, fueling concern the region’s debt crisis will hurt the global economy.

The MSCI Emerging Markets Index slid 1 percent to 956.22 at 10:35 a.m. in London, snapping a six-day, 10 percent rally. The Taiex Index slid 2 percent in Taiwan and the Kospi Index sank 1 percent in Seoul. The Hang Seng China Enterprises Index retreated 1.5 percent after Fitch Ratings said a Chinese property-price correction will lead to worsening loan portfolios while Nomura Holdings Inc. cut its estimate for China’s economic growth next year. The Micex Index slipped 0.6 percent in Russia.

Euro-region nations including Germany and France risk losing their AAA credit ratings, S&P said yesterday. German Chancellor Angela Merkel and French President Nicolas Sarkozy strengthened their push for new rules to tighten euro area economic cooperation ahead of a summit of European leaders on Dec. 8-9.

“Investors are more cautious this morning” following the move by S&P, Slava Smolyaninov and Leonid Slipchenko, analysts at UralSib Capital in Moscow, said in an e-mailed note to clients. “This comes in anticipation of this week’s EU summit and is supposed to send the right message to regional leaders to find a compromise and speed up efforts to remove tensions in the European financial system.”

Steel, Ruble

Steelmaker OAO Magnitogorsk Iron & Steel fell 1.6 percent in Moscow and OAO Gazprom, the world’s largest natural gas exporter, slid 1.4 percent as metals prices retreated and oil slumped as much as 0.6 percent.

The ruble fell 0.7 percent against the dollar, and the rand weakened 1.2 percent. The lira depreciated by 0.4 percent.

The FTSE/JSE Africa All Share Index slipped 0.3 percent in Johannesburg.

OTP Bank Nyrt., Hungary’s largest lender, led declines in Budapest, falling 2 percent. The BUX Index slid 1.3 percent.

Industrial & Commercial Bank of China Ltd. dropped 1.2 percent in Hong Kong trading. Bank of China Ltd. sank 1.8 percent, its first loss in four days.

Chinese banks’ exposure to the property market is understated, Charlene Chu, head of China financial institutions at Fitch Ratings, told reporters on a teleconference yesterday. Nomura Holdings Inc. cut its estimate for China’s economic growth next year to 7.9 percent from 8.6 percent as investment in private housing slows and external demand weakens.

Taiwan, Korea

E Ink Holdings Inc. sank 7 percent in Taipei. Client Amazon.com Inc.’s Kindle Fire has Wi-Fi functionality problems, Electronista reported. STX Pan Ocean Co., South Korea’s biggest bulk carrier, fell 4.5 percent, the most since Nov. 10, after the company said a leak was found in a ballast tank on an iron- ore transport vessel.

The extra yield investors demand to own emerging-market debt over U.S. Treasuries fell three basis points, or 0.03 percentage point, to 402, according to JPMorgan Chase & Co.’s EMBI Global Index.

The Markit iTraxx SovX CEEMEA Index of eastern European, Middle East and Africa credit-default swaps declined one basis points to 307, according to data provider CMA.

Indian markets were closed for a holiday.

-- Editors: Linda Shen, Stephen Kirkland

To contact the reporter on this story: Ian Sayson in Manila at isayson@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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