Emerging stocks decline

Singapore: Emerging-market stocks fell for the third day, putting the benchmark index on course for the longest losing streak in a month, amid concern the global economic slowdown is hurting corporate earnings.

The MSCI Emerging Markets Index lost 0.3 per cent to 957.64 at 2:56pm in Hong Kong. China Southern Airlines Co. tumbled the most in 11 weeks as first-half profit dropped more than estimated. TPK Holding Co. and Chimei Innolux Corp slumped at least 5.9 per cent in Taipei after announcing plans to raise capital. PT Bumi Resources slid to the lowest level since March 2009 in Jakarta and Taiwan’s Giant Manufacturing Co. fell the most in 10 weeks amid brokerage downgrades.

Chinese companies from China Southern to Huaxin Cement Co. reported lower earnings. Japan’s government downgraded its assessment of its economy for the first time in 10 months amid risks of a further slowdown in global growth. Data on second- quarter U.S. gross domestic product is due tomorrow before an Aug. 31 speech by Federal Reserve Chairman Ben S. Bernanke at an annual meeting in Jackson Hole, Wyoming.

“There will be a lot more downward earnings revisions,” said Daphne Roth, Singapore-based head of Asian equity research at ABN Amro Private Banking, which oversees about $207 billion. “There’s a fear China will grow slower than expected, impacting companies. That won’t be good for share prices.” Roth made the comments by phone today.

Industrial companies and raw-material producers led declines in MSCI’s developing-nations gauge, which is poised for the lowest close since August 3. The measure has gained 4.5 per cent this year, trailing a 8.6 per cent increase by the MSCI World Index of developed nations. The emerging-markets index trades at 10.8 times estimated earnings, compared with 13 for the MSCI World, data compiled by Bloomberg show.

Taiwan’s Taiex index and Vietnam’s VN Index fell at least 0.7 per cent. The Shanghai Composite Index climbed 0.8 per cent, erasing a drop of 0.2 per cent, amid speculation more state-owned companies will announce share buybacks. Baoshan Iron & Steel Co. climbed 10 per cent on plans to spend as much as 5 billion yuan ($787 million) purchasing its own shares.

China Southern, mainland’s biggest on domestic routes was headed for the biggest decline since June 8 in Hong Kong trading. The company’s net income fell to 424 million yuan (Dh245 million), under international accounting standards, as an economic slowdown sapped travel demand and fuel costs rose.

TPK fell by the 7 per cent daily limit in Taipei. Chimei slid 5.9 per cent, the biggest drop since Aug. 3. TPK said yesterday its board approved a plan to raise as much as $250 million (Dh919.5 million) from selling five-year convertible bonds and the sale of global depositary receipts backed by as many as 22 million shares. Chimei said yesterday its board approved a plan to sell 600 million new shares.

Bumi Resources

“Investors are worried this would dilute the earnings per share” of both companies, Peggy Lee, an analyst at Capital Management Co., said by phone from Taipei today.

Bumi Resources, an Indonesian coal mining company, slumped 16 per cent. The stock was cut to underperform from neutral at CIMB Group Holdings Bhd. Bumi shares have fallen 19 per cent the past two days since the company reported a first-half loss of $322 million. The slump is “irrational” and Bumi’s sales and growth are “operationally sound,” Director Dileep Srivastava said in an e-mailed response to questions today.

Hiwin Technologies Corp, slid the most among industrial companies in MSCI’s emerging-markets index, falling 6.3 per cent after JPMorgan Chase & Co. cut its rating to neutral.

Taiwan’s Giant led losses among consumer discretionary companies after HSBC Holdings Plc cut its rating to underweight from overweight, saying second-quarter earnings were lower than expected and there was a risk to growth in Europe.