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Seoul - Emerging-market stocks fell the most in two weeks on concern central banks around the world are drawing back from injecting stimulus, sapping demand for higher-yielding assets.
Malaysia’s ringgit slid for a fifth day as authorities in Singapore and the US moved to seize assets linked to a troubled state investment fund and as oil headed for a weekly loss.
Indonesian stocks dropped for a second session after the central bank refrained from cutting interest rates on Thursday. Chinese shares declined following losses in US equities on Thursday.
Bank of Japan Governor Haruhiko Kuroda ruled out so-called helicopter money, or the idea of directly financing government debt, in a BBC radio program aired on Thursday.
At an ECB meeting the same day, President Mario Draghi said policy makers will only add stimulus once they have a clearer picture of the economic impact of the UK’s vote to leave the European Union.
In the US, traders have increased the odds of higher rates this year to 46%, from 12% at the start of July.
"The concern about global central banks withdrawing from providing further stimulus definitely affects markets across the board, from the US to emerging markets," said Ang Kok Heng, chief investment officer at Phillip Capital Management in Kuala Lumpur.
'That’s why we see some investors selling down their assets. Profit-taking that happened in the US also triggered selling in Asian markets."
Stocks
The MSCI Emerging Markets Index of shares fell 0.3% as of 7:04 a.m. in Hong Kong, almost wiping out this week’s gains. All 10 industry groups dropped. The gauge has still advanced 9.4% this year. Vietnam’s benchmark equity index led declines in Asia, sliding 1.9%, Indonesia’s lost 0.7% and China’s slid 0.5%.
Indonesian shares dropped from near a 13-month high after central bank Governor Agus Martowardojo and his board kept their key reference rate at 6.5% on Thursday.
Sixteen of 26 economists surveyed by Bloomberg had predicted a quarter point cut.
The rally in developing-nation assets is running into increasing headwinds after being boosted since January on optimism central banks will provide enough stimulus to assist the global recovery.
Currencies
The MSCI Emerging Markets Currency Index fell 0.1%, halting a two-day gain.
Malaysia’s ringgit slumped as Brent crude headed for a weekly loss of 2.8%. More than $3.5bn was misappropriated from 1Malaysia Development, and about $1bn was laundered through America’s banking system, the US Justice Department said in filings on Wednesday.
Oil prices have affected the ringgit and the latest developments on 1MDB may have "an impact on the political front, which we don’t know how it will work out and how serious it is," said Irene Cheung, a foreign-exchange strategist at Australia & New Zealand Banking Group in Singapore.
The ringgit tumbled 0.7% to 4.0663 per dollar. Its five-day losing streak is the longest since November 2015. Malaysia’s benchmark stock index slipped 0.1%.
