Bloomberg News

Emerging Stocks Fall First Day in Five on Europe Debt Concern

January 04, 2012

Jan. 4 (Bloomberg) -- Emerging-market stocks fell for the first time in five days on concern Europe’s debt crisis will worsen and as Chinese house prices retreated for a fourth month.

The MSCI Emerging Markets Index slid 0.3 percent to 937.54 at the close in New York. The Hang Seng China Enterprises Index of Chinese companies listed in Hong Kong lost 1.4 percent and Turkey’s benchmark gauge declined 2.5 percent. Hungary’s forint fell to the lowest level against the euro. Brazil’s Bovespa Index advanced for a fourth day.

The European Central Bank reported overnight deposits from financial institutions rose to an all-time high and Luxembourg Prime Minister Jean-Claude Juncker said the European Union is facing a recession of unknown scope. Hungary may fail to obtain an International Monetary Fund financing agreement in the first half of this year, Citigroup Inc. said in an e-mailed report.

“The liquidity provisions from the ECB are not really having the impact that was hoped for, so it seems like the markets are losing their nerve again,” Lars Christensen, a Copenhagen-based economist at Danske Bank A/S, said in a phone interview. “The worries from Hungary are obviously having quite a bit of regional impact.”

Agile Property Holdings Ltd. dropped 6.5 percent in Hong Kong, while Anhui Conch Cement Co., China’s biggest maker of the building material by sales, fell 4.4 percent.

Chinese Property

China’s home prices fell for a fourth month in December and Premier Wen Jiabao said business conditions may be “relatively difficult” this quarter. Chinese property values decreased 0.25 percent from November, SouFun Holdings Ltd., the nation’s biggest real-estate website owner, said today. Prices slid in 60 of 100 cities, and all of the 10 biggest, including Beijing and Shanghai.

OTP Bank Nyrt., Hungary’s biggest lender, led declines in Budapest, falling 6.9 percent. The forint depreciated 1.3 percent versus the euro.

The central bank may need to raise the benchmark interest rate by as much as 3 percentage points to support the forint in the absence of international financial aid, Budapest-based Citigroup economist Eszter Gargyan said in an e-mailed report.

Turkiye Garanti Bankasi AS, Turkey’s biggest publicly- traded bank, fell 2.9 percent in Istanbul.

The extra yield investors demand to own emerging-market debt over U.S. Treasuries dropped three basis points, or 0.03 percentage point, to 414, according to JPMorgan Chase & Co.’s EMBI Global Index.

Brazilian stocks advanced 0.2 percent as Cia. de Saneamento Basico do Estado de Sao Paulo, Brazil’s biggest water utility, rose 4.6 percent to 54.60 reais, a record high. The MSCI Brazil/Utilities Index jumped the most among 10 industry groups.

Thailand’s SET Index, the Philippine Stock Exchange Index and the Jakarta Composite Index added more than 1 percent.

--With assistance from Tal Barak Harif and Zachary Tracer in New York. Editors: Peter Branton, 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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