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Most Emerging Stocks Decline Amid Chinese Share Sale Concerns

Tuesday, 26 Aug 2014 06:19 AM

Aug. 26 (Bloomberg) -- Most emerging-market stocks dropped as Chinese shares sank on concern new share sales may divert funds while investors awaited a meeting between the leaders of Russia and Ukraine.

The Shanghai Composite Index slid the most in two weeks. Guangzhou R&F Properties Co. sank 7.2 percent in Hong Kong after cutting its sales target. Russian shares fell 0.3 percent and the ruble lost 0.2 percent versus the dollar. Hyundai Heavy Industries Co. led South Korean shipbuilders higher amid record low valuations. The won rose 0.3 percent, while the yield on 10- year notes dropped four basis points to 3.07 percent.

The MSCI Emerging Markets Index was little changed at 1,085.20 at 9:30 a.m. in London. Russian President Vladimir Putin is set to meet his Ukrainian counterpart, Petro Poroshenko today, as tensions flare on the two nations’ border. Durable goods and housing data is due in the U.S. today after new-home sales fell short of all economists’ estimates.

“Geopolitical tension remains the big risk. Any compromise over the Ukraine conflict would significantly ease investors’ concerns,” Warut Siwasariyanon, the head of research at Asia Wealth Securities Co. Ltd., said by phone in Bangkok. “Valuations of global equities are quite stretched.”

The developing-nation gauge has gained 8.2 percent this year and trades at 11.3 times projected 12-month earnings, the most expensive level since January 2011, data compiled by Bloomberg show. The MSCI World Index has risen 5 percent in 2014 and is valued at a multiple of 15.1.

Meeting Scheduled

Russia’s Micex Index fell, led by declines in OAO Sberbank. Putin is scheduled to meet with Poroshenko in Minsk, Belarus, during a summit of the Customs Union, a Russian-led trade bloc.

European Union representatives will be present at the talks, which are aimed at providing respite to a conflict that the United Nations says has left at least 2,000 dead since Putin annexed the Crimean peninsula in March.

Ukraine yesterday said an armored column including 10 tanks entered from Russia as the government in Moscow unveiled plans to send a second convoy with humanitarian aid into its neighbor’s rebel-held territory.

The Shanghai Composite Index fell 1 percent, its second day of declines. The ten companies that will start to market initial-public-offering shares this week may freeze about 800 billion yuan ($130 billion), according to the Shanghai Securities News.

Lower Target

Guangzhou R&F slid the most in 14 months after lowering its contracted sales target to 60 billion yuan ($9.7 billion) from 70 billion yuan. Sino Biopharmaceutical Ltd. added 3.9 percent after China International Capital Corp. upgraded the stock to buy. The Hang Seng China Enterprises Index of mainland companies listed in Hong Kong rose 0.1 percent.

Five out of 10 industry groups in the emerging-markets measure fell, led by utilities, while health-care stocks rose the most. Jindal Steel & Power Ltd. slid 6.2 percent, extending yesterday’s 14 percent plunge. Reliance Power Ltd. lost 7.9 percent, the most on the developing-nation gauge.

India’s highest court yesterday ruled that giving away coal mines to companies since 1993 was illegal. The ruling spurred concern mining permits may be canceled and deprive power and steel projects of fuel.

Pakistan’s rupee lost 1.3 percent and the nation’s equity gauge sank 0.4 percent. Cleric Muhammad Tahir-ul-Qadri, who has been leading a 12-day protest, gave Prime Minister Nawaz Sharif 48 hours to dissolve the parliament and call fresh elections, or face consequences.

Shipbuilders Gain

Hyundai Heavy and Samsung Heavy Industries Co. rose at least 3 percent. Hyundai Mipo Dockyard Co. surged 7.4 percent. South Korean shipbuilders, this year’s worst-performing industry group in the Kospi index, are attracting buy recommendations from three of the nation’s biggest brokerages as valuations sank to records.

KB Financial Group Inc. climbed 3 percent in Seoul after HSBC Holdings Plc upgraded the stock to overweight. The Kospi added 0.3 percent.

Turkey’s Borsa Istanbul 100 index rose 1.3 percent to a three-week high and the lira strengthened 0.3 percent to a one- week high. Vietnam’s VN Index added 0.5 percent, its fifth day of increases to the highest close since March 2008. The Jakarta Composite Index retreated 0.6 percent.

--With assistance from Sharon Cho in Seoul and Kyunghee Park in Singapore.

To contact the reporter on this story: Anuchit Nguyen in Bangkok at anguyen@bloomberg.net To contact the editors responsible for this story: Michael Patterson at mpatterson10@bloomberg.net Chan Tien Hin, Phani Varahabhotla

© Copyright 2017 Bloomberg News. All rights reserved.

 
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Tuesday, 26 Aug 2014 06:19 AM
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