Emerging markets bore the brunt of a clamor for safety as investors fretted over the fallout from Europe’s worst terror attack in more than a decade.
Philippine shares led the slide as the MSCI Emerging Markets Index sank to a six-week low. Asian airlines tumbled on concern tourists will cut back on travel to Europe, while tighter curbs on the use of borrowed money to buy Chinese shares dragged Hong Kong-traded mainland companies lower.
Developing-nation currencies weakened, paced by South Korea’s won. The New Taiwan dollar climbed.
The MSCI emerging-markets gauge decreased 1.1 percent to 811.76 at 2:30pm in Hong Kong, extending the steepest weekly slide since September, as Europe’s worst terror attack in a decade on Friday deepened concern that geopolitical tension will curb trade and slow global growth.
The violence comes as the US prepares to raise the near-zero borrowing costs that have supported demand for riskier assets in developing nations.
“The recent attack in Paris is making investors nervous as it shows terrorism is on the rise,” says Rafael Palma Gil, who helps manage about US$1.8 billion as a trader at Rizal Commercial Banking Corp in Manila. “Before, this market was weak on anticipation that the US will raise interest rates. The global picture already isn’t looking good and these attacks are adding to the negative market sentiment.”
An index tracking 20 currencies in developing countries retreated for a third day. MSCI’s emerging-markets measure has slumped 15 percent this year, sending the gauge’s 14-day relative strength index to 33.2, the lowest since Sept. 7. A reading below 30 is a signal to some traders selling is overdone.
The Philippine Stock Exchange Index sank 2.3 percent, the most since Aug. 24, as the prospect of higher interest rates in the US spurred foreign outflows. The gauge has fallen for nine straight days, while foreign investors pulled a net US$65.8 million from the nation’s shares last week, the most in two months.
China’s China Southern Airlines Co (中國南方航空) and China Eastern Airlines Corp (中國東方航空) dropped more than 2 percent on worries that the deadly terrorist attacks in Paris will deter tourists from traveling to the French capital.
French warplanes bombed the Islamic State’s nerve center in Raqqa after at least 129 people were killed in more than half a dozen locations in Paris.
France said the deadly violence was directed from Syria and launched from Belgium.
The Islamic State said the Paris attacks were payback for France’s military involvement in the Middle East.
Hong Kong’s Hang Seng China Enterprises Index declined 1.7 percent after mainland officials moved to contain the rise in leveraged wagers on equities. Mainland stock exchanges cut by half the amount of borrowed money investors can use to buy shares, as authorities sought to prevent a repeat of the excesses that led a US$5 trillion rout. The Shanghai Composite Index climbed 0.5 percent after it earlier slid as much as 1.7 percent.
SK Networks Co plunged 22 percent in Seoul, dragging the KOSPI to the lowest level since Sept. 23. Shinsegae Co advanced 3.5 percent after winning a license to operate tax- exempt retail outlets in the South Korean capital. Shinsegae was awarded one held by SK Networks.
Equity gauges in Indonesia, Vietnam and Thailand declined at least 0.7 percent. Dubai stocks climbed 0.2 percent after tumbling 3.7 percent on Sunday. The won weakened 0.9 percent versus the US dollar, while Turkey’s lira, Indonesia’s rupiah and Malaysia’s ringgit fell at least 0.5 percent.
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