Emerging market stocks fall from one-year high

Bloomberg

Emerging-market stocks retreated from their highest level in a year as oil’s descent into a bear market weighed on energy producers and investors assessed the outlook for the global economy.
Shares in Russia and the oil-exporting Gulf region led losses as oil traded near $40 a barrel in New York after tumbling to the lowest close since April on Monday. Polish stocks bucked the trend, rallying the most worldwide, after proposed legislation spared banks the immediate cost of converting $36 billion of Swiss-franc home loans into zloty. Poland’s currency was also the best performer among peers, while the South Africa’s rand and Malaysia’s ringgit were the biggest decliners.
Equities retreated as investors turned their focus on the global economy after speculation that central banks will boost stimulus and the U.S. will keep interest rates low amid lackluster growth sent valuations to the highest level since May 2015. Japan’s plan for extra government spending to boost the world’s third-largest economy underwhelmed money managers.
“Markets are likely to be cautious going into August, given volatility is generally lower, solid summer performance thus far and the wariness of any surprises around the corner,” said Simon Quijano-Evans, a strategist at Legal & General Group Plc in London. “The growth and oil price concerns appear to be the dominating factors today.”
Currencies in emerging markets tend to underperform this month, falling in seven of the past 10 Augusts, as some investors cut holdings of assets considered to be riskier in case they’re caught out while on vacation. Liquidity in foreign-exchange trading dropped a majority of the time, according to Bank of America Corp. data.

Stocks
The MSCI Emerging Markets Index lost 0.3 percent to 879.73 by 2:17 p.m. in London, sliding from its highest level since August 2015. Eight of the 10 industry groups fell with telecommunications shares leading losses. Companies in the broader index are trading at 12.3 times their 12-month estimated earnings, compared with 16.3 for developed markets.
Russia’s Micex Index fell 1.4 percent as Lukoil PJSC lost 2.9 percent. Stocks in Abu Dhabi, Dubai and Saudi Arabia fell at least 1.2 percent. “Oil prices are once again the source of major pressure on emerging markets,” said Rakpong Chaisuparakul, an investment strategist at KGI Securities (Thailand) Pcl in Bangkok. “Most investors are also worried about high valuations of some stocks after their recent rallies. Some may take this opportunity to take profit.” Polish banks PKO Bank Polski SA and Bank Zachodni WBK SA led gains in Warsaw, sending the WIG20 Index up 2.3 percent. President Andrzej Duda’s proposals envisage gradual conversion of franc-denominated home loans into zloty through regulatory changes, central bank Governor Adam Glapinski told reporters on Tuesday.
Chinese stocks rose the most in a week, with developers helping pace the advance in thin trading. A typhoon shuttered Hong Kong’s markets for the day.