Business

Emerging stocks fall to one-month low on Chinese factory data

Harry Suhartono

Continued speculation of imminent tapering from the US Federal Reserve sees negative data impacting developing markets.

A Chinese manufacturing index unexpectedly fell to a three-month low, suggesting the world’s second-largest economy is vulnerable to a slowdown. (AFP)

Emerging-market stocks dropped, dragging the benchmark gauge to a one-month low, after a survey showed Chinese manufacturing expanded less than estimated and investors weighed the timing of a cut in US stimulus.

SAIC Motor Corporation paced losses by Chinese automakers in Shanghai amid concern city governments will impose more measures to curb pollution. Advanced Semiconductor Engineering Incorporated tumbled the most in 22 months in Taipei after regulators ordered some machines to be idled at a plant.

South Africa's rand and Indonesia's rupiah weakened 0.2% versus the dollar. India’s 10-year bond yields climbed to a three-week high after the government reported the fastest wholesale-price inflation in more than a year.

The MSCI Emerging Markets Index slid 0.3% to 987.90 as of 4:15 pm in Hong Kong, its fifth day of declines. A Chinese manufacturing index unexpectedly fell to a three-month low, suggesting the world’s second-largest economy is vulnerable to a slowdown.

The Federal Reserve may begin reducing its $85-billion of monthly bond purchases at its December 17-18 meeting, according to 34% of economists in a December 6 Bloomberg survey, up from 17% in a November 8 poll.

"The main focus is on the Fed tapering," Jeffrosenberg Tan, a fund manager at PT Sinarmas Asset Management, said by phone from Jakarta. "With investors’ confidence still in a fragile state, any negative news will have an impact on the market," he said, referring to China's manufacturing data.

Stock valuations
The MSCI emerging markets gauge has fallen 6.4% this year, bound for the steepest annual loss since 2011, and trades at 10.1 times its 12-month projected earnings. The MSCI World Index has advanced 19% this year and is valued at 14.2 times, according to data compiled by Bloomberg.

The Shanghai Composite Index slid 1.6%, the biggest drop in a month. The gauge sank for a fifth day, capping the longest stretch of losses since June. The preliminary reading of 50.5 for a Purchasing Managers’ Index released today by HSBC Holdings Plc and Markit Economics compares with a final figure of 50.8 in November and the 50.9 median estimate in a Bloomberg News survey. The seven-day repurchase rate rose 0.14 percentage point to 4.44%.

SAIC Motor tumbled the most since March 4, while Great Wall Motor Company retreated 3.5%. Tianjin, a port city near Beijing, will issue license plates through auctions and lotteries, the state-run Xinhua News Agency said on Sunday. The Hang Seng China Enterprises Index of mainland companies listed in Hong Kong dropped 0.9% to the lowest level since November 15.

Industry groups
Eight out of 10 industry groups in the
MSCI Emerging Markets Index slid, led by financial and energy stocks. Advanced Semiconductor Engineering tumbled 6.9% the biggest decline in the developing-nation gauge. Regulators ordered machines to be idled at a company plant in Chungli city, northern Taiwan, because waste water hasn’t been treated, violating pollution laws, the Environmental Protection Bureau of the Taoyuan county government said on Sunday. Taiwan’s Taiex Index declined 0.8%.

Indonesia’s Jakarta Composite Index fell 1.3%, heading for the lowest close since September 6, while Thailand’s SET Index lost 0.7%.

The S&P BSE Sensex of Indian shares dropped 0.3%, its fifth day of declines, while the rupee gained for the first time in four days. The yield on India's 8.83% government debt due November 2023 climbed one basis point, or 0.01 percentage point, to 8.92%, according to the central bank's trading system. That’s the highest level for a benchmark 10-year note since November 22, data compiled by Bloomberg show.

Data showed on Monday India's wholesale prices climbed 7.5%in November compared with 7% estimated by economists in a Bloomberg survey, adding pressure for a further increase in the benchmark interest rate this week.

Infosys Ltd climbed 2.6% to a 35-month high in Mumbai after JPMorgan Chase & Company raised its price target by 8.6% to 3 800 rupees.

Russia's Micex Index advanced 0.3%, rising for a second day, led by gains in OAO MegaFon. The Philippine Stock Exchange Index increased 0.8%, paced by SM Investments Corporation  and Ayala Land Inc. – Bloomberg

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