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Emerging-market stocks fell from a four-week high before a meeting of European Central Bank policy makers today and on renewed concerns China will further curb its property market.
The MSCI Emerging Markets Index (MXEF) fell 0.6 percent to 948.65 as of 9:50 a.m. in London, its first drop in six days, snapping the longest rally since April. Samsung Electronics Co. (005930), which gets more than a third of its sales from Europe and America, slid the most in more than three weeks, the largest drag on the emerging-markets gauge. Chinese developers including Poly Real Estate (600048) Group Co. slumped in Shanghai.
The ECB will announce a policy decision today following President Mario Draghi’s pledge last week to do “whatever it takes” to keep the euro together, interpreted by most as a signal the ECB will intervene in bond markets. Should Draghi fail to overcome German objections to such action, the disappointment could spark a selloff. The U.S. Federal Reserve Open Market Committee yesterday refrained from adding stimulus to the economy.
“Yesterday’s decision by the FOMC to make no new assets purchases came as little surprise, and the ECB meeting results will play a more crucial role,” Slava Smolyaninov, analyst at UralSib Capital in Moscow, wrote in an e-mail to clients. “Markets believe some kind of loosening is on the way and they may be seriously disappointed if hawks win this time, providing no new support to the ailing Spanish and Italian sovereign debt markets.”
The 21 nations in the MSCI emerging market gauge send about 30 percent of their exports to the European Union on average, data compiled by the World Trade Organization show.
The Shanghai Composite Index (SHCOMP) fell 0.7 percent.
Poly Real Estate slumped 9.2 percent and China Vanke Co (200002), the biggest listed developer on mainland exchanges, sank 6.8 percent, the most since Jan. 17, 2011. Chinese Premier Wen Jiabao said the country will “unswervingly” implement property controls and prevent housing prices from rebounding, the official Xinhua News Agency reported this week, citing a government meeting held on July 26.
The BUX Index (BUX) slid 0.6 percent in Hungary.
The Micex Index added 0.2 percent in Moscow. Benchmark indexes in South Africa and Turkey were little changed.
The rand appreciated 0.4 percent against the dollar, heading for its first gain this week. The ruble weakened 0.3 percent and the lira lost 0.5 percent.
The Hang Seng China Enterprises Index (HSCEI) lost 1 percent, the steepest drop since July 23. China Railway Construction Corp. (1186) fell 3.4 percent after agreeing to buy a 15 percent stake in Inter Milan, an Italian soccer club, according to people familiar with the talks. Dubai’s DFM General Index (DFMGI) rose 0.3 percent, climbing for a fourth day to its highest level since May 8.
The Kospi Index (KOSPI) slid 0.6 percent in Seoul. Samsung Electronics, South Korea’s largest exporter of consumer electronics, declined 2.9 percent in Seoul. Korea Gas Corp. (036460) rose 2.7 percent after its partner Eni SpA (ENI) announced a “new giant” gas discovery off the coast of Mozambique.
Taiwan’s financial markets were closed due to a typhoon.
The Markit iTraxx SovX CEEMEA Index of eastern European, Middle East and Africa credit-default swaps fell less than one basis point to 243, heading for its seventh consecutive decline, the longest streak since January
The extra yield investors demand to own emerging-market debt over U.S. Treasuries was unchanged at 334 basis points, according to JPMorgan Chase & Co.’s EMBI Global Index.
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