LONDON, Jan 16 — Emerging-market stocks posted a third straight weekly decline, slumping to the lowest since 2009 as Chinese equities fell into a bear market and oil’s slide below US$30 (RM132.75) a barrel sapped energy producers. The zloty fell the most since 2011 as Standard & Poor’s cut Poland’s credit rating.
The Shanghai Composite Index decreased more than 20 per cent from its December high as volatility in the yuan and a report that some banks have stopped accepting shares of smaller listed companies as collateral further eroded investor confidence in China’s markets and economy. Gazprom PAO and Lukoil PJSC each fell at least 4.2 per cent in Moscow. Nigerian equities retreated for a sixth day as Brent crude posted a 13 per cent weekly decline. The zloty tumbled 2 per cent against the euro.
About US$2 trillion has been shaved from emerging-market stock values amid a broader global rout this year on concern China’s economic slowdown will deepen, forcing policy makers to seek a weaker yuan. The drop in oil added to the gloom, with analysts at Citibank predicting further declines as Iran moves closer to restoring exports.
“The market perception of China remains fragile and the pressures on emerging markets remain significant,” said Guillaume Tresca, a strategist at Credit Agricole SA in Paris. “It is still not yet time for an EM turnaround as the uncertainties lingering ahead are still numerous.”
No asset class has been spared the selloff this year, with the premium investors demand to hold emerging-market debt over US Treasuries widening 12 basis points yesterday to 468, according to JPMorgan Chase & Co Indexes, bringing the weekly increase to about 31 basis points.
The MSCI Emerging Markets Index dropped 1.9 per cent to 709.19, extending its decline this week to 4.2 per cent. Developing-nation stocks trade, on average, at 10.3 times projected 12-month earnings, a 28 per cent discount to advanced— country shares in the MSCI World Index, according to data compiled by Bloomberg.
The zloty weakened to 4.4815 per euro. S&P cut Poland’s debt grade to BBB+, the third-lowest investment level, in the first rating move for the country since 2007, according to statement issued yesterday. The rating company warned that policies of the new government are imperiling the nation’s institutions.
The Shanghai gauge retreated 3.6 per cent, taking its weekly drop to 9 per cent. The Hang Seng China Enterprises gauge declined 2.6 per cent to a four-year low as Industrial and Commercial Bank of China Ltd slumped. The Micex Index fell 4.3 per cent in Moscow, bringing the weekly retreat to 8 per cent, the most since May 2012 on a closing basis.
The Ibovespa retreated 2.4 per cent in Sao Paulo. Petroleo Brasileiro SA, the Brazilian state-run oil company, fell 9.1 per cent, leading declines in commodity companies. The Nigerian Stock Exchange All Share Index fell 3 per cent. Nigeria is Africa’s largest oil producer.
All 10 industry groups in the developing-nations gauge declined this week, with energy shares down the most and telecommunications stocks declining the least. Taiwan Semiconductor Manufacturing Co was among the biggest gainers, completing its best week since November, after the contract manufacturer of chips for Apple Inc. posted fourth-quarter profit that beat analysts’ estimates.
An index tracking 20 emerging-market currencies depreciated 0.8 per cent, extending a weekly decline to 0.8 per cent. Russia’s ruble followed oil prices lower, sliding 2 per cent to 77.603 per dollar. Analysts at Royal Bank of Scotland Plc warned the currency of the world’s largest energy exporter may weaken to 80 per dollar if oil continues its slide toward US$26 a barrel.
The South African rand, the Mexican peso and Brazil’s real each weakened at least 1.6 per cent.
The offshore yuan retreated 0.2 per cent yesterday, paring a weekly advance to 1 per cent. The People’s Bank of China limited the currency’s supply and forced a narrowing of its discount to the mainland rate.
The onshore spot rate rose 0.1 per cent, paring its loss this year to 1.4 per cent, as the monetary authority maintained steady fixings. The Hong Kong dollar narrowed 0.2 per cent, to a four-year low of 7.793 versus the dollar. — Bloomberg