Shanghai - Emerging-market stocks retreated from a two-month high and Asian currencies weakened as a selloff in commodities along with prospects of higher US interest rates damped demand for riskier assets.
China’s Cnooc and South Korea’s Posco fell at least 1.5 percent to lead energy and materials stocks lower. Hong Kong’s Hang Seng China Enterprises Index slid from a two-month high and South African stocks lost 0.9 percent. Malaysia’s ringgit sank 1.4 percent and South Korea’s won halted a four-day gain versus the dollar. Russia’s ruble was little changed. South Africa’s rand appreciated for the first time in three days.
The MSCI Emerging Markets Index lost 0.4 percent to 864.04 at 9:31 a.m. in London, halting a three-day gain. The Bloomberg Commodity Index sank the most in a month Monday after data showed China’s economy in the third quarter expanded at the slowest pace since 2009. Federal Reserve Bank of San Francisco chief John Williams said the U.S. central bank should raise interest rates in the near future as inflation is expected to stabilize and growth will stay on track.
“Markets are reacting to the Chinese data because basically China is the major commodity buyer, if they are slowing down then their demand for commodities is also going to slow down,” said Andrew Sullivan, managing director for sales trading at Haitong International Securities Group in Hong Kong. “It is part of the wider global stance of waiting for the Fed to make a decision as we are all looking for certainty, not maybe.”
Rate outlook
Fed officials at their meeting last month kept rates near zero amid growing risks to their outlook, due primarily to slower growth in China. Chair Janet Yellen, Vice Chairman Stanley Fischer and other officials, including Williams, have since said they still expect a rate rise is warranted this year. Policy makers meet again Oct. 27-28 and in December.
The developing-nation gauge has dropped 9.5 percent this year and is valued at 11.3 times projected 12-month earnings, data compiled by Bloomberg show. The MSCI World Index, which has retreated 1.7 percent in 2015, trades at a multiple of 15.7.
All 10 industry groups in the emerging-markets index declined, led by energy and materials companies. Cnooc, China’s biggest offshore oil and gas explorer, declined for a second time in three days. Posco, a steelmaker, slid the most since Oct. 2.
China shares
The Hang Seng China Enterprises gauge retreated 0.4 percent. The Shanghai Composite Index climbed 1.1 percent to an eight-week high after economic data showed faster growth in the services sector and margin debt posted its longest stretch of gains since August. The ChiNext Composite Index, whose 484 stocks represent the most dynamic parts of the economy such as technology and biotech, gained 2.9 percent.
Russia stocks declined 0.7 percent, set for its third day of losses. South African equities was poised for the lowest close since October 7. Turkish shares climbed toward the highest level since July 22.
The ringgit weakened for a third day and Malaysian stocks fell 0.9 percent on concern falling raw-materials prices will hurt government income and widen the budget deficit. The government gets 22 percent of its revenue from oil-related exports and Prime Minister Najib Razak is scheduled to deliver his 2016 annual budget plan on Friday.
Indonesia’s rupiah and the won dropped at least 0.8 percent. A Bloomberg gauge of developing-nation currencies dropped for a third day. Stock gauges in South Korea, Taiwan and Thailand climbed at least 0.3 percent.
BLOOMBERG