Emerging stocks set for 5-week low

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Jakarta - Emerging-market stocks headed for a five-week low as Chinese shares sank and equities tumbled from Hungary to Turkey.

The ruble slid to a four-month low amid deepening concern the Ukraine crisis will escalate.

Great Wall Motor decreased 1.8 percent in Hong Kong, while African Bank Investments Ltd. plunged 63 percent in Johannesburg after its chief executive officer quit.

Hungarian stocks lost the most among their peers in emerging Europe, led by Magyar Telekom, and Turkish shares declined for the fifth day.

Russian bonds slumped and the ruble fell 0.4 percent versus the dollar.

The MSCI Emerging Markets Index retreated 0.8 percent to 1,054.79 at 11:27 am in London, poised for the weakest close since July 1.

Chinese stocks slid for a second day on speculation a world-beating rally was overdone.

Poland’s foreign minister said yesterday a renewed buildup of Russian troops on Ukraine’s border raises the spectre of invasion.

“The Ukraine conflict is not close to a resolution and tensions between Russia and the West will also continue,” Michael Wang, a markets strategist in London at Amiya Capital LLP, said by e-mail.

“Emerging-market valuations are average, having been cheap at the start of the year.”

The measure for developing stocks has risen 5.3 percent this year and trades at 11 times 12-month projected earnings, compared with 10.4 on January 1, data compiled by Bloomberg show.

The MSCI World Index has gained 2.1 percent and is valued at a multiple of 14.6.

 

Deleting Shares

 

The Micex Index fell 0.9 percent in Moscow, set for the lowest close since May 6.

OAO Sberbank retreated to the lowest level since April 25.

MSCI Inc. is discussing deleting the lender’s shares from its MSCI Russia index, in addition to a review of VTB Bank announced earlier, the index provider said in an e-mailed statement.

Russian President Vladimir Putin ordered his government to respond to US and European sanctions.

The ruble headed for the lowest level since March 21 versus the dollar.

Hungary’s BUX Index tumbled as much as 1.8 percent in the third day of declines as Magyar Telekom headed for the steepest decline in a year.

Majority owner Deutsche Telekom AG’s plans to sell a US mobile unit to Sprint Corp. failed, a person familiar with the matter said.

“Some market players had expected Deutsche Telekom to launch a bid for Magyar Telekom backed by funds from the US deal,” Akos Kuti, a Budapest-based analyst at Equilor Befektetesi Zrt., said by e-mail.

 

Turkish Elections

 

African Bank Investments, South Africa’s largest provider of unsecured loans, plummeted the most on record.

Chief executive and founder Leon Kirkinis stepped down after 23 years with the bank, it said in a statement.

The lender will seek a potential capital increase following stock sale in December.

Equities in Turkey slid 1.1 percent to the lowest level since July 11 on a closing basis, while the lira dropped 0.5 percent versus the dollar.

A victory for Turkish Prime Minister Recep Tayyip Erdogan as the first directly elected president in Turkey’s history on August 10 would allow him to control the National Security Council and decide on the use of military power while keeping a grip on the government run by his party.

Erdogan’s “declared intention to consolidate the presidential power could continue” the country’s drift toward authoritarianism, Amy Yuan Zhuang, a senior analyst at Nordea Markets in Copenhagen, said in an e-mailed note.

 

Samsung Slumps

 

Dubai’s benchmark gauge, the world’s best performer in dollar terms in 2014, lost 2.4 percent, the most since July 20.

All 10 industry groups in the emerging-markets gauge retreated, led by phone companies and consumer-discretionary shares.

Samsung Electronics dropped 1.2 percent in Seoul, the largest drag on the developing-nation gauge.

The Hang Seng China Enterprises Index of mainland companies listed in Hong Kong, which entered a bull market last week, fell 0.3 percent, extending yesterday’s 0.7 percent loss.

The Shanghai Composite Index slipped 0.1 percent, paring a rebound from this year’s low to 11 percent.

The Shanghai Composite will probably end its rally within days and fall about 10 percent, according to Tom DeMark, the developer of market-timing indicators.

The Jakarta Composite Index decreased 1 percent.

Indonesia’s Constitutional Court began hearing on legal challenges from former general Prabowo Subianto who demanded the judge to declare him winner due to alleged vote fraud by President-elect Joko Widodo.

The premium investors demand to own emerging-market debt over US Treasuries rose one basis point to 281, JPMorgan Chase & Co. indexes show. - Bloomberg News



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