Emerging-Market Stocks Decline as HSBC Says Growth to Slow

Emerging-market stocks fell for the first time in four days after HSBC Holdings Plc (HSBA) said slower growth in developing economies curbed profit and investors speculated the U.S. Federal Reserve will reduce stimulus soon.

Industrial & Commercial Bank of China Ltd. and China Construction Bank Corp. dropped at least 1 percent in Hong Kong after HSBC said the mainland Chinese market slowed unexpectedly. Longfor Properties fell the most in three weeks after China's top planning body reiterated the government would maintain curbs on the real-estate industry. Benchmark indexes in the Philippines, Poland and Russia lost at least 0.5 percent as better-than-expected U.S. service industries data fueled speculation the Fed will scale back monthly bond purchases.

The MSCI Emerging Markets Index lost 0.7 percent to 949.89 at 4:20 p.m. in Hong Kong. The HSBC Emerging Markets Future Output Index, a monthly gauge of company executives' expectations for production in a year, contracted for the first time since April 2009, HSBC said. Fed Bank of Dallas President Richard Fisher warned investors yesterday not to rely on the central bank's $85 billion in monthly bond purchases.

"Capital is flowing out of developing nations on expectations that the U.S. will cut its monetary stimulus, which will eventually happen in October," said Wu Kan, a Shanghai-based fund manager at Dragon Life Insurance Co., which oversees $3.3 billion in assets. "Fund outflows will exacerbate the situation of slowing growth in developing countries."

Technology, Financials

India's rupee declined to a record low of 61.81 per dollar today, while most currencies among developing Asian nations also weakened. Trading volume in India's S&P BSE Sensex Index was 25 percent above the 30-day average for the time of day.

Gauges of technology and materials stocks in the MSCI Emerging Markets Index fell, the biggest decliners among 10 industry groups. The broader gauge has lost 10 percent this year, compared with a 14 percent increase in the MSCI World Index. The developing-nation gauge trades at 10 times projected 12-month earnings, compared with the MSCI World's 14 times, according to data compiled by Bloomberg.

ICBC, China's biggest listed lender, fell 1.4 percent. Construction Bank, the second largest, slid 1.2 percent. HSBC, Europe's biggest bank, declined in London and Hong Kong trading after profit missed analysts' estimates. First-half net income rose 22 percent to $10.28 billion, the London-based lender said yesterday in a statement. That was less than the $10.57 billion estimate of five analysts surveyed by Bloomberg.

Property Curbs

Longfor lost 2.4 percent in Hong Kong, poised for its biggest decline since July 16. China will maintain its current macro-control policies for the property industry, the official Xinhua News Agency reported yesterday, citing Xu Shaoshi, chairman of the National Development & Reform Commission.

Tofas Turk Otomobil Fabrikasi AS (TOASO), the Turkish carmaker co-owned by Fiat SpA, slid 3.5 percent in Istanbul. The company reported second-quarter profit of 109.2 million liras ($56.5 million), trailing the average estimate of 127.6 million liras in a Bloomberg survey of 11 analysts.

Lee & Man Paper Manufacturing Ltd. (2314) tumbled 9.8 percent in Hong Kong, heading for the biggest loss since October 2011. Credit Suisse Group AG downgraded its rating on the stock to underperform on lower-than-expected industry margins.

TPK Holding Co., a supplier of touch screens to Apple Inc., slumped 4.4 percent in Taipei. The company reported net income of NT$3.14 billion ($105 million) for the quarter ended June 30, compared with the median estimate of NT$3.19 billion in a Bloomberg survey.

Simplo Technology Co. (6121), a maker of lithium batteries, surged 4.7 percent in Taipei after reporting profit of NT$650 million, compared with the median NT$620 million forecast of analysts.