(Bloomberg)--Emerging-market stocks headed for the steepest weeklydrop since June while currencies weakened amid growing concerns that Chinas economic slowdown and Russias standoff with the West will spur capital outflows.
The MSCI Emerging Markets Index fell 0.9% to 935.10 as of 4:50 p.m. in Hong Kong, extending this weeks loss to 3.3%. The Hang Seng China Enterprises Index posted its biggest weekly drop since October as Tencent Holdings Ltd. and China Citic Bank Corp. slumped. Russias Micex Index tumbled to the lowest level since 2010. South Koreas won and Turkeys lira lost 0.3% versus the dollar. Indonesias equity gauge rallied 3.2% and the rupiah erased losses after Jakarta Governor Joko Widodo received the mandate to run for president.
UBS AG, Bank of America Corp. and JPMorgan Chase & Co. cut their forecasts for Chinese growth after disappointing data this week fueled speculation the nation may not meet its 7.5% expansion target for 2014. Crimea votes on whether to leave Ukraine and join Russia March 16 as the U.S. and Germany step up pressure on Moscow over its support for secession.
Chinas slowing growth is now confirmed, said Attila Vajda, Singapore-based managing director at Project Asia Research & Consulting Pte. This combined with other grim headlines such as the Crimea stand-off is definitely making investors pause and take some profit.
Developing-nation equity funds posted a 20th week of outflows in the period ended March 12, led by $878 million of withdrawals from China funds, Citigroup Inc. said in a report today, citing data compiled by EPFR Global.
TRADING VALUATIONS
The MSCI emerging markets gauge has declined 6.8% this year and trades at 9.9 times projected 12-month earnings. The MSCI World Index has dropped 1% this year and is valued at 14.6 times, data compiled by Bloomberg show.
The Hang Seng China index fell as much as 20% from its Dec. 2 high, a threshold some investors consider a bear market, before paring losses in the afternoon session.
The gauge has dropped 4.2% this week, the most since Oct. 25, amid growing concern that weaker economic growth will curb earnings and spur corporate defaults.
The Shanghai Composite Index lost 0.7% today. Data yesterday showed factory output in January and February grew the least since 2009 from a year earlier, while retail sales expanded at the slowest rate since 2004.
All 10 industry groups in the developing-nation gauge fell, led by technology companies. Tencent sank 4.1%, while China Citic Bank, which announced plans to offer virtual credit cards with Tencent earlier this week, fell 6.9% before its shares were suspended.
VIRTUAL CARDS
Chinas central bank blocked plans by Tencent and an affiliate of Alibaba Group Holding Ltd. to offer virtual credit cards, a person with knowledge of the matter said, as the government moves to tighten restrictions on online financial products.
New World China Land Ltd. jumped 29% in Hong Kong, the biggest gain in the MSCI Emerging Markets Index. New World Development Ltd. offered HK$18.6 billion ($2.4 billion) to take its China property unit private after shares in the arm traded below net asset value for more than six years.
The Micex tumbled 3.9%, heading for the worst week since September 2011. OAO Magnit, the nations largest food retailer, slumped 8.5%, while OAO Sberbank, the biggest Russian lender, sank 4.6%.
U.S. Secretary of State John Kerry told a Senate panel in Washington yesterday that the U.S. and Europe will take very serious steps the day after the Crimea vote if there is no sign of a resolution to the crisis.
INDONESIAN STOCKS
The Jakarta Composite Index rose to the highest level since June 7. The benchmark gauge entered a bull market after it advanced more than 20% from its Aug. 27 low. Widodo has been given the mandate to run for president by Megawati Soekarnoputri, chairwoman of the Indonesian Democratic Party of Struggle, Puan Maharani, Megawatis daugther and head of its central executive board, said on television.
A legislative election is slated for April and Indonesians will vote again in July to choose a successor to President Susilo Bambang Yudhoyono, who has led the country since 2004.
Benchmark equity gauges in Taiwan, Philippines and South Korea slid at least 0.6%.
Indias rupee headed for its biggest weekly loss in almost two months. The ringgit and lira were poised for the steepest weekly drop since Jan. 24.
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