Emerging-market currencies weakened, led by South Africa’s rand, on speculation the Federal Reserve will scale back stimulus and signs of a slowdown in China. Turkey’s lira sank as the prime minister warned protestors and lashed out against financial speculators.
The rand slid to a four-year low against the dollar on a closing basis and India’s rupee sank to a record. The lira headed for the biggest retreat in a year. Emlak Konut Gayrimenkul Yatirim Ortakligi AS slumped by the most on record in Istanbul after the state-owned property developer canceled a secondary public offering, citing market conditions amid protests.
South Africa’s currency depreciated 2% to 10.1664 per dollar at 2:10 p.m. in London. A report June 7 showed American employers took on more workers than forecast in May after Fed Chairman Ben S. Bernanke told Congress last month that the central bank could reduce its bond purchases, among stimulus measures known as quantitative easing, if the job market improves in a “real and sustainable way.” Chinese industrial production rose a less-than-forecast 9.2% from a year earlier and factory-gate prices fell for a 15th month, National Bureau of Statistics data showed yesterday in Beijing.
“The pressure continues to be on emerging-market currencies almost everywhere,” Martial Godet, head of emerging- markets strategy at BNP Paribas SA in London, said by e-mail. “Foreign-currency reserves, current-account balances, flows are very much at the center of the focus in a scenario of QE tapering.”
The MSCI Emerging Markets Index fell even 0.7% to 973.62 even as 364 stocks advanced and 350 declined. The gauge has dropped 7.7% this year, compared with a 10% gain in the MSCI World Index. The developing-nation index trades at 10 times projected 12-month earnings, compared with the MSCI World’s 13.6 times, data compiled by Bloomberg show.
The Bloomberg-JPMorgan Asia Dollar Index dropped to the lowest level since September as the rupee, the South Korean won and the Philippine peso depreciated at least 1.1% versus the dollar. The Polish zloty, the Hungarian forint and the Czech koruna lost at least 0.3% versus the euro today. Brazil’s real slipped 0.8% versus the dollar.
The rand slid as much as 2.6% to the lowest since March 2009. China’s export gains were at a 10-month low and imports dropped after a crackdown on fake trade invoices while fixed-asset investment growth moderated and new yuan loans declined. China is the biggest buyer of South African raw materials including iron ore and coal.
“While the U.S. data has been too strong for comfort, Chinese figures have been too weak,” John Cairns, a currency strategist at Rand Merchant Bank in Johannesburg, said in e- mailed comments. “The net result of the U.S. and Chinese data has been to put the high-yielding commodity currencies under pressure.”
The lira lost 1.1% against the dollar and Turkey’s benchmark stock index sank 1.1%.
“You who started this struggle against us, you’ll pay a heavy price for it,” Prime Minister Recep Tayyip Erdogan said, referring to private banks and an “interest-rates lobby” he says is trying to undermine and profit from Turkey’s economy by keeping its rates high. “The interest rates lobby has exploited my people’s sweat for years, and you won’t be able to exploit it any longer.”
Erdogan said yesterday that his government would “squeeze the throat” of speculators in the stock market.
Emlak Konut plunged 8.7% in Istanbul as the company delayed its secondary public offering due to market fluctuations, the company said after market closed on June 7.
Russia’s ruble slipped 0.5% against the dollar to its weakest since Sept. 3. The central bank left its main interest rates unchanged at Chairman Sergey Ignatiev’s last policy meeting as inflation growing at the fastest pace in 21 months overshadowed risks from the slowing economy.
The rupee declined 1.9%, weakening for a fourth day. The shortfall in India’s current account, the broadest measure of trade, widened to an unprecedented 5% of gross domestic product in the year ended March 31, according to government estimates. The “panic” in India’s currency market is “unwarranted,” Economic Affairs Secretary Arvind Mayaram said today.
Benchmark equity gauges in Russia and the Czech Republic declined today, while those in Poland and Hungary rose.
The Hang Seng China Enterprises Index of mainland companies listed in Hong Kong fell 0.6% to the lowest level since Oct. 10. It slumped for a ninth day, capping the longest losing streak since March 2012. China’s market is closed for holidays.
Indonesia’s Jakarta Composite Index slid 1.8% to the lowest level since March 22. Foreign institutional investors sold a net $183.6 million of Indonesian equities on June 7, the most since Aug. 19, 2011, data compiled by Bloomberg show.
A gauge of technology companies in MSCI’s developing-nation index was the only gainer among 10 industry groups. A measure of consumer discretionary stocks slid 1.1%, leading declines.
Largan Precision Co., a lens supplier for Apple Inc., gained 6.8% to a record in Taipei after the Commercial Times said the U.S. company will sell a lower-priced iPhone in August. Zhen Ding Technology Holding Ltd., another Apple supplier, gained 3.6%.
Hyundai Merchant Marine Co., the biggest shareholder of Hyundai Asan Corp., which manages a resort in Mount Geumgang in North Korea, jumped 15% as South Korea agreed to minister-level negotiations this week with the communist regime. The stock was the biggest gainer in South Korea’s Kospi index, which rose 0.5%. The agenda will focus on reopening the Gaeseong factory shut in April as well as resuming tourism at a North Korean luxury resort, according to the statement.
Zoomlion Heavy Industry Science & Technology Co., China’s second-largest maker of construction equipment, slumped 3% to a record in Hong Kong.
The extra yield investors demand to own emerging-market debt over U.S. Treasuries rose fell three basis points, or 0.03 percentage point, to 310 basis points, according to JPMorgan Chase & Co.’s EMBI Global Diversified Index.