TAIPEI, April 6 — Emerging-market stocks fell to a three-week low as concern that global growth is faltering offset the impact of higher oil prices.

Taiwanese shares and currency dropped, catching up with declines in developing economies earlier in the week, as the island’s markets reopened after a two-day holiday. Chinese shares swung between gains and losses after the benchmark index closed at a three-month high and a private gauge of services climbed. Taiwan Semiconductor Manufacturing Co. and Hon Hai Precision Industry Co. contributed the most to the drop in MSCI Emerging Markets Index. A gauge of emerging currencies fell for a second day, with South Africa’s rand erasing gains. Malaysia’s ringgit and Russia’s ruble rose.

Developing-nation assets are retreating in April after completing their best month since at least 2009 as commodity prices weakened and investors assessed the outlook for higher US interest rates before the Federal Reserve releases minutes today of its March meeting. International Monetary Fund Managing Director Christine Lagarde yesterday flagged growing risks to the global recovery, and Boston Federal Reserve President Eric Rosengren said on Monday that market expectations for just one US rate increase this year may be too pessimistic.

“What we are seeing is some investors locking in gains from the first quarter,” Agus Yanuar, president director at Samuel Aset Manajemen in Jakarta,  who helps manage US$356 million (RM1.4 billion) in assets. “I’m confident that emerging equities will outperform developed-market stocks this year. The risk on China’s economy has subsided while the Fed might not raise rates until the second half.”

Stocks

The developing-nation stocks gauge retreated 0.5 per cent to 809.08 as of 9.21am in London, and is down 3.3 per cent in April after a 13 per cent jump in March, the biggest since May 2009. It’s up 1.9 per cent this year and is trading at 11.5 times 12-month projected earnings of its constituents. That compares with a 2.7 per cent drop in the MSCI World Index, which is valued at multiple of 15.6, according to data compiled by Bloomberg.

Taiwan Semiconductor fell 3.2 per cent, the most since September 23, providing the biggest drag for the MSCI gauge. Hon Hai Precision dropped 2.2 per cent, the most since Feb. 15, and Taiwan’s Taiex sank 1.7 per cent to a five-week low on its first trading day of the week. A gauge of energy shares rose 0.5 per cent.

Russia’s Micex index gained 0.2 per cent and Dubai’s DFM General Index rose 0.1 per cent as oil gains, while equity benchmarks in Vietnam and Pakistan fell at least 0.6 per cent. The Shanghai Composite Index erased gains, slipping 0.1 per cent.

“We don’t believe the rally in emerging markets can extend significantly this year,” said Tariq Ali, an investment strategist at Standard Chartered Plc in Singapore. “The rally has been the result of the excessive pessimism on emerging-market assets last year and is further supported by a dovish Fed and a weaker dollar.”

Currencies

The MSCI Emerging Markets Currency Index fell 0.2 per cent, led by a 0.4 per cent drop in the rand 0.3 per cent each in Turkey’s lira and India’s rupee, while Taiwan’s dollar closed 0.2 per cent weaker. The ringgit gained 0.4 per cent and ruble rose 0.2 per cent.

The gauge surged by a record 5.2 per cent in March and was up about 4 per cent in the first quarter as investors returned to riskier assets.

“This temporary relief is going to be just that,” said Mitul Kotecha, the head of Asian foreign-exchange and interest-rate strategy at Barclays Plc in Singapore. “While in the second quarter we might continue to see a little bit of consolidation, our view is that we will see a firmer dollar and similar worries that we had in early first quarter, such as China growth and currency concerns and renewed commodity-price pressures.”

Bonds

Government bonds rose in Malaysia, with the 10-year yield falling two basis points to 3.8 per cent The rates on comparable Indonesian, Indian and Chinese notes climbed one basis point each to 7.64 per cent, 7.47 per cent and 2.89 per cent, respectively. — Bloomberg