Emerging Stocks Drop to One-Week Low on China Property Concerns
By Saeromi Shin - Mar 13, 2013
Emerging-market stocks fell to a one-week low as Chinese real estate and construction companies slid on concern policy makers will step up property curbs. The won sank after South Korea’s unemployment rate rose.
China Resources Land Ltd. (1109) and Zoomlion Heavy Industry Science and Technology Co. slid at least 2.8 percent in Hong Kong after Sina.com said the southern city of Shenzhen banned developers from raising new home prices. Nine Dragons Paper Holdings Ltd. tumbled the most in seven months in Hong Kong after a shareholder sold a stake. The won weakened for a fifth day, the longest stretch of declines in 10 months.
The MSCI Emerging Markets Index slipped 0.3 percent to 1,054.87 at 1:38 p.m. in Hong Kong, falling for a third day. The Shanghai Stock Exchange Property Index (SHPROP) retreated 2.5 percent, poised for the lowest close in three months. South Korea’s unemployment rate climbed to the highest in a year, a government report showed today, topping economists’ estimates.
“The continued news flow that triggered concerns over China’s property tightening are weighing on investors’ sentiment,” Kim Dae Young, a fund manager at KB Asset Management Co., which manages about $28 billion in assets, said by phone from Seoul. “The government seems to be trying to prevent the property market from overheating.”
The Shanghai Composite Index fell 1.2 percent to a two- month low, its fifth day of declines. The Hang Seng China Enterprises Index (HSCEI) of mainland companies listed in Hong Kong lost 1.5 percent. India’s S&P BSE Sensex sank 0.6 percent, set for its steepest drop since Feb. 28. The FTSE Bursa Malaysia KLCI Index retreated 0.6 percent.
Trading Volumes
Trading volumes in the Shanghai Composite were 24 percent below the 30-day average, data compiled by Bloomberg showed. Volumes for Taiwan’s Taiex index were 19 percent lower. Malaysia’s ringgit climbed 0.2 percent against the dollar while the won fell 0.2 percent.
The MSCI Emerging Markets Index is little changed for the year, trailing a 7.1 percent gain in the MSCI World Index (MXWO) of developed-country stocks. The emerging-markets measure trades at 10.7 times 12-month projected profit, compared with the MSCI World’s 13.5 times, according to data compiled by Bloomberg.
Gauges of industrial stocks and financial companies in the MSCI Emerging Markets Index (MXEF) posted the biggest declines among the 10 industry groups. China Resources Land dropped the most since March 4. Greentown China Holdings Ltd. (3900) tumbled 7 percent in Hong Kong, bound for the lowest close since Nov. 29.
Biggest Declines
Shenzhen’s land authorities won’t approve the sale of property projects with higher prices, news portal Sina.com reported, citing unidentified officials with developers. Shenzhen adjoins Hong Kong.
Zoomlion Heavy, a Chinese construction equipment maker, headed for the lowest close since Nov. 20, while China Construction Bank Corp. (939) lost 1.4 percent. Nine of the biggest decliners on the emerging-markets gauge were Chinese companies.
Nine Dragons is headed for the steepest slump since July 25. Block trades of 61 million shares crossed at HK$7.23 each, data compiled by Bloomberg showed. A shareholder offered to sell Nine Dragons (2689) shares at HK$7.23 to HK$7.38 each, the Hong Kong Economic Journal reported.
Delta Electronics Inc. (2308), a maker of power-supply packs for notebook computers, surged 6.7 percent in Taipei after earnings beat analyst estimates and Credit Suisse Group AG and Macquarie Group Ltd. recommended buying the shares. The stock was the best performer on the MSCI Emerging Markets index.
To contact the reporter on this story: Saeromi Shin in Seoul at sshin15@bloomberg.net
To contact the editor responsible for this story: Allen Wan at awan3@bloomberg.net
