Emerging Markets Emerging stocks fall on China PMI; Weak dollar boosts currencies

by **Cals** Tue 03 May 2016, 23:59

Emerging Markets

[size=28]Emerging stocks fall on China PMI; Weak dollar boosts currencies

By Bloomberg / Bloomberg | May 3, 2016 : 12:12 PM MYT

(May 3): Emerging-market equities fell for a third day as disappointing Chinese manufacturing data added to concern global growth is losing momentum. Currencies rose against the dollar as bets for a U.S. interest-rate increase this year receded.

Chinese shares traded in Hong Kong led the losses in developing-nation equities as many markets across Asia reopened following Monday’s holiday. The Shanghai Composite Index climbed more than 1 percent even after gauges of factory output came in below forecast. Malaysia’s ringgit dropped by the most in a week due to an overnight slump in Brent crude prices that dimmed the outlook for the oil exporter’s finances. Gyrations in the commodity have largely dictated moves in the currency in the past two years.

“China is fueling the negative sentiment,” said Jonathan Ravelas, chief market strategist at Manila-based BDO Unibank Inc., the largest Philippine bank by assets. The weakness in manufacturing “reinforces expectations that China remains fragile and that it needs more stimulus to sustain economic improvement,” he said.

While Chinese data have yet to suggest a solid economic recovery, U.S. manufacturing figures issued on Monday also showed slowing growth for that sector. Interest-rate futures are pricing in just 12% odds that the Federal Reserve will raise borrowing costs by its next meeting in June and 60% by December. That compares with 24% and 62% respectively, a month ago. A measure tracking the dollar against 10 peers posted a fourth day of losses on Tuesday to reach the lowest level in a year.

The MSCI Emerging Markets Index of stocks declined 0.3% as of 11:25 a.m. in Hong Kong and has dropped 1.3% in three days. The Hang Seng China Enterprises Index of mainland shares fell 1.6%, the steepest descent in a month. The Shanghai Composite gauge rose 1.5%, halting a three-day losing streak. The FTSE Bursa Malaysia KLCI Index was down for a seventh day.

The MSCI Emerging Markets Currency Index rose 0.1%. The ringgit dropped 0.5% and was the biggest decliner in Asia.
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