Ringgit rises: 4.3730 4.3830 +0.23
HANOI/SEOUL: Emerging-market stocks and currencies fell on concern central banks around the world are drawing back from adding stimulus, sapping demand for higher-yielding assets.
Malaysia’s ringgit slid for a fifth day as authorities in Singapore and the U.S. 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 slipped the most in two weeks following losses in U.S. 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 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 U.K.’s vote to leave the European Union.
In the U.S., traders have increased the odds of higher rates this year to 46 percent, from 12 percent at the start of July.
“The concern about global central banks withdrawing from providing further stimulus definitely affects markets across the board, from the U.S. to emerging markets,” said Ang Kok Heng, chief investment officer at Phillip Capital Management Bhd in Kuala Lumpur.
“That’s why we see some investors selling down their assets. Profit-taking that happened in the U.S. also triggered selling in Asian markets.”
The MSCI Emerging Markets Index of shares fell 0.3 percent as of1:14 p.m. in Hong Kong, almost wiping out this week’s gains. All 10 industry groups dropped. The gauge has still advanced 9.3 percent this year. Vietnam’s benchmark equity index declined 1.9 percent, Indonesia’s lost 0.7 percent and China’s slid 0.6 percent.
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 percent 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 percent. The gauge has declined 0.5 percent from an 11-month high reached on July 14.
Malaysia’s ringgit slumped as brent crude headed for a weekly loss of 2.8 percent. More than $3.5 billion was misappropriated from 1Malaysia Development Bhd., and about $1 billion was laundered through America’s banking system, the U.S. Justice Department said in filings Wednesday.
Oil prices have affected the ringgit.
The ringgit fell 0.7 percent to 4.0680 per dollar. Its five-day losing streak is the longest since November 2015. Malaysia’s benchmark stock index slipped 0.1 percent. - Bloomberg
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