Weak Chinese data hurts emerging stocks, knocks India's BSE Sensex off highs

Written by Reuters | London | Updated: Mar 11 2014, 00:59am hrs
Bse sensexBSE Sensex has been rallying ahead of elections that many investors expect will bring in a more reform-friendly government. (Reuters)
Emerging market stocks fell 1 percent on Monday, pulled down by poor Chinese economic data that re-ignited concerns of slowdown in the world's No. 2 economy and pushed Chinese shares to a five-year closing low.

Chinese mainland shares fell more than 3 percent and the losses rippled across emerging markets, dragging the main emerging equity benchmark off six-week highs hit last week.

Weekend data showed China's exports unexpectedly tumbled in February, with a near-20 percent year-on-year dip swinging the trade balance into deficit. That piled fresh pressure on emerging assets which were looking shaky after robust U.S. jobs data on Friday boosted Treasury yields.

"Emerging markets had basically two (bits of) negative news in the last 2-3 days - US non-farm payrolls which increased the possibility that tapering will intensify, and quite poor Chinese data," said HSBC strategist Murat Toprak.

The Chinese data also brought down India BSE Sensex from its third consecutive record high, with metals shares down 1.5-3.0 percent.

BSE Sensex has been rallying ahead of elections that many investors expect will bring in a more reform-friendly government. Foreign funds have pumped $1.4 billion into Indian shares in the past two weeks.

South Africa's mining-heavy stock index fell more than 1 percent on the day, with Kumba Iron Ore tumbling more than 7 percent and heading for its biggest one-day loss in five months.

Kumba's main market is China.

Moscow markets were closed for a holiday but the stock market has suffered three straight weeks of losses, while the rouble is trading just off record lows to the dollar on back of tensions with Ukraine over Russian troops' presence in Crimea.

Russian forces tightened their grip on Crimea over the weekend, fanning tensions ahead of a planned Moscow-backed referendum next Sunday on whether the Black Sea peninsula should join Russia.

Ukrainian markets were also shut.

Most emerging market currencies weakened against the dollar, with China's yuan again seeing a weaker central bank fix . The Korean won and Malaysian ringgit fell more than half a percent to the dollar .

In emerging Europe, the Turkish lira was given a brief boost by data showing a 7.3 percent jump in industrial output but the gains quickly faded under the impact of political tensions at home. Analysts said the lira was unlikely to rise above 2.20 .

"As the euro zone recovers, increasing exports to euro zone countries pull up industrial production," said Erkan Dernek, a strategist at Odeabank in Istanbul.

But he added: "As there are some concerns with Ukraine and the elections are getting closer in Turkey, the appreciation of the lira remains limited."

Oil-rich Azerbaijan opened books on its 10-year debut Eurobond offering, with initial price guidance of 200 basis points over U.S. Treasuries.

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