Bloomberg News

Most Emerging Stocks Decline on China, India Growth

March 15, 2012

(Corrects scope of Hang Seng index in sixth paragraph)

Most emerging-market stocks retreated, following two days of gains in the benchmark index, on concern that growth in China and India is slowing.

Three shares declined for every two that advanced in the MSCI Emerging Markets Index (MXEF), which fell less than 0.1 percent to 1,066.41 at 11:40 a.m. in London. A gauge of Chinese property companies lost 2.5 percent, tipping the Shanghai Composite Index to its biggest two-day drop in since August. The BSE India Sensitive Index (SENSEX) slid 1.4 percent. Turkish banks led the ISE National 100 Index (XU100) 0.5 percent higher.

Foreign direct investment in China fell 0.9 percent in February, its fourth straight decline, as companies reined in spending amid a slowdown in the world’s second-biggest economy and the prolonged European debt crisis. The Reserve Bank of India kept the repurchase rate at 8.5 percent for a third consecutive meeting, it said today. Economic growth may slow to 6.9 percent this year as inflation stays “high,” Finance Minister Pranab Mukherjee said today.

“Fears of a slowdown in China and India are keeping investors at bay,” said Jonathan Ravelas, chief market strategist at Manila-based BDO Unibank Inc. “A slowdown in China and an elusive recovery in India may weaken demand and send commodity prices lower further.”

The U.S. Labor Department may say today that the number of Americans applying for jobless benefits fell to 357,000 last week, from 362,000 a week earlier, according to economists surveyed by Bloomberg News.

Shanghai Stocks Fall

The Shanghai Composite Index fell 0.7 percent, taking its two-day decline to 3.3 percent, the most since Aug. 9. The Hang Seng China Enterprises Index (HSCEI) of mainland companies slid 0.5 percent., its biggest decline since March 7.

China Vanke Co. (200002), the nation’s biggest listed property developer, fell 3.4 percent in Shanghai, and Poly Real Estate Group Co. (600048) , the second-largest, slid 2.6 percent. Premier Wen Jiabao said yesterday home prices are still far from reasonable levels, dimming hopes real-estate curbs will be eased.

China’s economy is already in a “hard landing,” Adrian Mowat, JPMorgan Chase & Co.’s chief Asian and emerging-market strategist, said at a conference in Singapore yesterday. “It’s not a debate anymore, it’s a fact.”

State Bank of India Ltd. lost 2.4 percent as the central bank held rates steady.

India Inflation

Data yesterday showed India’s inflation accelerated for the first time in five months in February, weakening the case for lower borrowing costs. The wholesale-price index rose 6.95 percent in February, after rising 6.55 percent in January.

Akbank TAS (AKBNK), the Turkish bank part-owned by Citigroup Inc., gained 1.5 percent and Turkiye Garanti Bankasi AS (GARAN), the country’s biggest listed bank by market value, advanced 0.6 percent.

The Micex Index (MICEX) fell 0.2 percent in Moscow, snapping two days of gains. The FTSE/JSE Africa All Shares Index (JALSH) was little changed in Johannesburg. The Kospi Index (KOSPI) in Seoul and the Taiex Index (TWSE) in Taipei each fell less than 0.1 percent.

The rand appreciated 0.9 percent against the dollar, following its 2.5 percent decline yesterday, which had been the most since Dec. 8. The lira rose 0.3 percent and the zloty strengthened 0.4 percent versus the euro.

The extra yield investors demand to own emerging-market debt over U.S. Treasuries fell two basis points, or 0.02 percentage point, to 316, according to JPMorgan Chase & Co.’s EMBI Global Index.

To contact the reporter on this story: Ian Sayson in Manila at isayson@bloomberg.net; Jason Webb in London at 3466 or jwebb25@bloomberg.net.

To contact the editor responsible for this story: Gavin Serkin at gserkin@bloomberg.net


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