Rand leads emerging market stock fall from 13-month high

The rand declined on news that the World Bank had revised its forecast for South Africa's GDP growth from 2.3% to 2%. (Flickr)

The rand declined on news that the World Bank had revised its forecast for South Africa's GDP growth from 2.3% to 2%. (Flickr)

Emerging-market stocks fell from a 13-month high as China Mobile paced a drop for phone companies and Indian shares retreated from a record high. South Africa’s rand led developing-nation currencies lower.

China Mobile sank the most in seven weeks in Hong Kong. Indian equities slid for the first time in five days, led by Reliance Industries.
The rand lost 0.6% versus the dollar after the World Bank lowered the nation’s growth forecast. Turkey’s lira weakened 0.5%. The yield on Iraq’s January 2028 government bond jumped 25 basis points to 6.75%, the highest in more than a month.

The MSCI Emerging Markets Index slid 0.2% to 1 055.68 at 4.16pm in Hong Kong, after a four-day rally drove valuations to the most expensive level since April 2011. The World Bank cut its global growth forecast to 2.8%, citing weaker outlooks for the US, Russia and China, while calling on emerging markets to strengthen their economies before the Federal Reserve raises interest rates.

“Slower global growth outlook combined with high valuations are causing some investors to reassess their positions,” said Jonathan Ravelas, chief market strategist at Manila-based BDO Unibank. “The World Bank’s outlook is bound to cut any rally.”

The developing-nation gauge has risen 5.4% this year an trades at 11 times 12-month projected earnings, data compiled by Bloomberg show. The MSCI World Index has increased 4.5% and is valued at a multiple of 15.2.

Off guard
In the report, the World Bank warned emerging markets that the next bout of financial unrest may catch them off guard, recommending smaller budget deficits, higher interest rates and measures to boost productivity.

Eight of 10 industry groups in the emerging-markets stock gauge fell, as telecom companies slid for the first time in five days. China Mobile, the world’s largest mobile-phone company by subscribers, lost 2.1%, the most since April 23.

A measure of technology shares rose for a second day to a record. Tencent Holdings, Asia’s largest Internet company, climbed 2.6% in Hong Kong after SocGen-Ji Asia upgraded the stock to buy from neutral. Infosys, India’s second- largest software services exporter, added 3.2% in Mumbai. The Sensex slid 0.8%, halting a four-day, 3.1% rally. Reliance Industries fell 1.6% in Mumbai.

The rand headed for its weakest level since March 24 after the World Bank cut its growth forecast for South Africa’s economy to 2% from a 2.7% prediction in January.

Iraqi bonds
Iraqi bonds fell for a second day. Fighters from a breakaway al-Qaeda group are in position to seize energy infrastructure after taking control of Mosul in a strike that highlights Prime Minister Nouri al-Maliki’s weakening grip on the country. Tribal gunmen allied to the group are close to capturing Baiji, north of Baghdad and home to Iraq’s biggest refinery, Al-Jazeera television said.

China’s Shanghai Composite Index rose 0.1% as utilities climbed on speculation the government is planning to announce measures to combat water pollution, overshadowing MSCI’s decision to exclude local shares from global gauges. The Hang Seng China Enterprises Index slid 0.1%.

Dubai slumps
Dubai’s DFM General Index slumped 1.6% to the lowest level since April 6, its fourth day of declines. Arabtec Holding tumbled 8.4%.

Russia’s Micex Index fell 0.1%, halting a three-day advance. Russia gave Ukraine an extra six days to begin payments in a gas-supply deal with the European Union as the parties prepare to resume talks on Wednesday in Brussels.

Samsung Electronics dropped 1% in Seoul after surging the most in a month on Tuesday. The stock was the biggest drag on the MSCI Emerging Markets Index. South Korea’s Kospi index and Taiwan’s Taiex index rose 0.1%.

Thailand’s SET Index fell 0.4%. It earlier advanced as much as 20% from this year’s low. The Philippine Stock Exchange Index rose 0.5% to a two-week high, while Vietnam’s VN Index climbed for a fourth day, adding 0.6%. – Bloomberg

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