Jakarta - Emerging-market stocks fell for a second day as Chinese shares erased gains and ITC led consumer-staples lower.
Russia’s ruble strengthened to a three-week high amid prospects of a cease-fire in Ukraine.
Bank of China led a 1.9 percent drop in a gauge of Hong Kong-traded Chinese shares amid concerns over slumping property prices and higher money-market rates.
Cigarette maker ITC sank 5.5 percent in Mumbai after India’s health ministry proposed higher taxes.
Arabtec led a 5 percent plunge in Dubai shares.
The ruble strengthened 0.6 percent versus the dollar after President Vladimir Putin backed support for a cease-fire declared by his Ukrainian counterpart.
The MSCI Emerging Markets Index sank 0.3 percent to 1,041.13 at 9:50 a.m. in London, erasing earlier advances of as much as 0.4 percent.
While better-than-anticipated Chinese manufacturing data spurred early gains in stocks, the advance was wiped out amid investor speculation that falling property prices and tighter liquidity in the banking system will weigh on economic growth, said Huaxi Securities.
“Although the PMI was better than expected today, there’s not enough confidence in the market to push any gains further,” said Mao Sheng, an analyst at Huaxi Securities in Chengdu.
“Property data are still weak.”
A preliminary Chinese Purchasing Managers’ Index from HSBC Holdings Plc and Markit Economics was at 50.8, exceeding the 49.7 median estimate of analysts surveyed by Bloomberg News and a final reading of 49.4 in May.
Stock Valuation
The emerging-markets gauge has gained 3.9 percent this year and trades at 10.9 times 12-month projected earnings, according to data compiled by Bloomberg.
The MSCI World Index has risen 5.3 percent and is valued at a multiple of 15.2.
Seven out of 10 industry groups in the MSCI Emerging Markets Index fell, paced by phone companies and financial shares.
The Hang Seng China Enterprises Index slid the most since April.
Bank of China sank 2.6 percent after the nation’s seven-day repurchase rate, a gauge of cash availability, rose to a seven-week high.
The selloff in Chinese stocks was amplified by concern a democracy poll in Hong Kong may strain ties with the mainland, according to Asian Capital and Ample Capital.
Great Wall Motor dropped 4.5 percent, extending its year-to-date plunge to 34 percent, after China’s largest SUV maker replaced three of its executives amid a sales slump.
Tobacco Tax
India’s S&P BSE Sensex index fell 0.7 percent, poised for the lowest close since June 4.
ITC tumbled the most since September 3, the biggest drop in the MSCI Emerging Markets Index.
Dubai’s DFM General Index fell to a three-month low as Arabtec plunged 9.9 percent.
Hundreds of employees have been fired at the builder since the departure of former chief executive officer Hasan Ismaik last week, three people familiar with the situation said, asking not to be identified because the information is private.
Naspers, Africa’s largest company by market value, retreated 3.2 percent in Johannesburg after full-year profit rose at the slowest pace in at least six years.
The ruble headed for the highest level since May 26 versus the dollar.
Putin said while he supports the week-long truce that Ukrainian President Petro Poroshenko announced on June 20, the move shouldn’t be an ultimatum to militia groups and won’t be “viable or realistic” without “constructive steps” to start negotiations with rebel leaders in the country’s southeast.
Poroshenko is seeking to quell violence in the Luhansk and Donetsk regions that’s left hundreds dead.
The Micex Index swung between gains and losses as the US and European Union warned of potential new sanctions against Russia.
Taiwan’s Taiex Index dropped 0.5 percent, its second day of declines.
The gauge reached the highest level since November 2007 on June 19.
South Korea’s Kospi index rose 0.4 percent, rebounding from a six-week low as Samsung Electronics ended a three-day slide.
Vietnam’s VN Index increased 0.9 percent, its first gain in six days, while the Philippine Stock Exchange Index added 0.5 percent. - Bloomberg News