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Manila - Emerging-markets bore the brunt of a clamour for safety as investors fretted over the fallout from Europe’s worst terror attack in more than a decade.
Chinese shares in Hong Kong led the MSCI Emerging Markets Index to a six-week low as mainland officials tightened curbs on the use of borrowed money to buy Chinese shares.
Asian airlines tumbled on concern tourists will cut back on travel to Europe. Developing-nation currencies weakened, paced by South Korea’s won, while Russia’s rouble was the biggest gainer.
The MSCI emerging-markets gauge decreased 1% to 812.89 at 02:27, 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 $1.8bn as a trader at Rizal Commercial Banking 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% this year, sending the gauge’s 14-day relative strength index to 33.6, the lowest since September 7. A reading below 30 is a signal to some traders selling is overdone.
Taiwan’s Eva Airways tumbled 5.4%, while China Southern Airlines and China Eastern Airlines dropped more than 2% on worries that the deadly terrorist attacks in Paris will deter tourists from traveling to the French capital.
France dispatched warplanes to bomb Islamic State’s nerve center in Raqqa, Syria, 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. Islamic State said the Paris attacks were payback for France’s military involvement in the Middle East.
AngloGold Ashanti [JSE:ANG] and Gold Fields [JSE:GFI] jumped at least 4.8% in Johannesburg as the attacks in Paris reinvigorated bullion’s traditional role as a haven. Gold climbed for the first time in five days.
Margin curbs
Hong Kong’s Hang Seng China Enterprises Index declined 2% 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 $5trn rout. The Shanghai Composite Index rose 0.7% on speculated state buying, erasing a decline of as much as 1.7%.
The Philippine Stock Exchange Index sank 1.8% 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 $65.8bn from the nation’s shares last week, the most in two months.
SK Networks plunged 22% in Seoul, dragging the Kospi index to the lowest level since September 25. Shinsegae rose 3.5% after winning a license to operate tax-exempt retail outlets in the South Korean capital. Shinsegae was awarded one held by SK Networks.
The won weakened 0.9% versus the dollar, while Turkey’s lira and Malaysia’s ringgit fell at least 0.6%. The ruble strengthened 0.6% and Russia’s Micex Index halted a six-day drop as oil rebounded. Dubai stocks climbed 0.8% after tumbling 3.7% on Sunday. Indian equities rebounded from a two-month low.
