JAKARTA, Sept 18 — Emerging-market stocks declined from a three-month high, led by technology shares and Indonesian banks before the Federal Reserve decides whether to reduce monetary stimulus.

Tencent Holdings Ltd. sank the most in six weeks in Hong Kong, retreating for a second day from a record high. PT Bank Rakyat Indonesia lost 2.5 per cent in Jakarta after HSBC Holdings Plc downgraded the stock. The rupiah weakened 0.6 per cent against the dollar, while the Malaysian ringgit and the Indian rupee gained at least 0.3 per cent.

The MSCI Emerging Markets Index fell 0.3 per cent to 999.85 as of 1:36pm in Hong Kong, its first loss in three days. The Fed concludes a two-day policy meeting today, with 33 of 64 economists in a Bloomberg News survey predicting the central bank will reduce its buying of Treasuries by US$5 billion (RM16.2 billion) or less, while 31 forecast a cut of US$10 billion or more. The developing-nation gauge has rallied 89 per cent since the Fed’s first round of bond-buying in 2008.

“Most investors are waiting for a clearer policy from the Fed today,” Budsares Yunniyom, a fund manager at Asset Plus Fund Management Co., which oversees about US$884 million of assets, said in Bangkok. “A larger-than-expected tapering will hurt emerging markets and lead to an outflow of funds. If the tapering is smaller, we expect a rally in stocks.”

The MSCI emerging markets index has lost 5.2 per cent this year, compared with a 16 per cent gain in the MSCI World Index of developed-nation shares. The developing-country index trades at 10.6 times projected 12-month earnings, lower than the MSCI World’s 14 times, data compiled by Bloomberg show.

Tencent slumps

Nine out of 10 industry groups in MSCI’s emerging-markets index fell, led by technology and consumer discretionary companies. Tencent, China’s No. 1 Internet company, lost 3.7 per cent. The company’s market value this week surpassed US$100 billion as the stock extended record highs this month.

Genting Malaysia Bhd., a casino operator, slumped 5.1 per cent in Kuala Lumpur, the biggest drop in the developing-nation measure. There is a possibility the government will increase gaming taxes when it unveils its 2014 budget on October 25, RHB Capital Bhd. wrote in a report yesterday.

The Jakarta Composite Index declined 0.6 per cent, the most since Sept. 4. Bank Rakyat slid the most since September 12 after HSBC cut the stock to underweight. PT Bank Mandiri, the country’s largest lender by assets, lost 1.7 per cent. Indonesian banks also fell on concern the nation’s central bank will raise interest rates further, said

John Teja, director at Jakarta-based Ciptadana Securities. The central bank increased interest rates last week to stem a slide in the currency.

Rupiah weakens

The rupiah fell for a second day and traded near its lowest level since April 2009. The ringgit led gains among Asia’s 11-most traded currencies.

The Hang Seng China Enterprises Index of mainland companies listed in Hong Kong lost 0.6 per cent. The Shanghai Composite Index fell 0.2 per cent, its fourth day of declines, as money-market rates climbed before the start of national holidays tomorrow. The stock gauge is headed for the longest stretch of losses since July.

Trading volumes on the Shanghai Composite Index were 18 per cent below its 30-day average, data compiled by Bloomberg show.

Benchmark gauges in the Philippines, Malaysia and Thailand dropped by at least 0.2 per cent each. The S&P BSE Sensex index of Indian shares gained 0.1 per cent. South Korean financial markets are closed. — Bloomberg