BLBG:Asian Stocks to Indian Bonds Decrease as Rupee Declines
Asian stocks fell for a fourth day after U.S. Treasury yields reached a two-year high. Currencies from India’s rupee to Indonesia’s rupiah declined amid an exodus that’s seen investors withdraw $8.4 billion from emerging market exchange-traded funds this year.
The MSCI Asia Pacific Index lost 1.3 percent at 2:02 p.m. in Tokyo. The Jakarta Composite Index dropped 4.3 percent, plunging 12.7 percent in a four-day rout. Standard & Poor’s 500 Index futures were little changed after the gauge slid to a five-week low in New York. Indian 10-year bond yields touched the highest level since 2001. The rupiah fell 1.7 percent and the rupee dropped 0.9 percent while Malaysia’s ringgit decreased for a seventh day. The New Zealand dollar slumped 1 percent as the central bank curbed home loans.
India’s rupee is at a record low, Thailand is in recession and Indonesia’s widest current-account deficit pushed the rupiah to the weakest level since 2009. The data are fueling pessimism in markets already concerned the Federal Reserve, which publishes minutes of its July meeting tomorrow, will start reducing bond purchases in September. Australia’s central bank signaled further interest-rate cuts remain a possibility, according to minutes of its Aug. 6 meeting.
“It’s a very uncomfortable period,” Richard Yetsenga, the head of global markets research at Australia & New Zealand Banking Group Ltd., told Bloomberg TV in Sydney. “Asia as a whole, even though the data’s probably ok, isn’t going to feel like a great place for a while as we adjust to the new world order where U.S. bond yields are going up, not down.”
Stocks Slide
About four stocks fell for each that gained on the Asia-Pacific index, which decreased to 131.98. Real estate and construction firms led declines in Jakarta where the benchmark index tumbled as much as 20 percent from a high in May.
Everbright Securities Co., the Chinese brokerage whose trading error whipsawed stocks last week, plunged by the 10 percent daily limit in Shanghai. The firm faces possible fines and more restrictions on business as the error threatens to erode confidence in China’s market.
Everbright, a state-controlled brokerage down 23 percent in Shanghai this year, was banned by China’s securities regulator from propriety trading for three months after making 23.4 billion yuan ($3.8 billion) of erroneous buy orders on Aug. 16. The broker also said it mispriced 10 million yuan of government bonds in a trade yesterday.
Treasury Yields
Australian 10-year government note yields slipped 1 basis point to 4 percent after five consecutive business days of increases to as high as 4.05 percent, data compiled by Bloomberg show. New Zealand 10-year yields fell 2 basis points to 4.64 percent. New Zealand’s central bank Governor Graeme Wheeler announced property loan restrictions from October to slow house-price growth.
India’s 10-year bond yields jumped to as high as 9.47 percent, the most since 2001, before easing to 9.28 percent.
Ten-year U.S. Treasury yields were down 4 basis points at 2.84 percent today, after rising 5.5 basis points in New York to 2.88 percent yesterday, the highest level since July 2011. The bonds yielded 40 basis points more than notes in an index of debt from the Group of Seven nations yesterday, the biggest premium since May 2010.
The cost of insuring corporate and sovereign bonds in the Asia-Pacific region against non-payment climbed to the highest level in six weeks, according to credit-default swap traders.
Jackson Hole
The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan rose 5 basis points to 158.5 basis points as of 8:17 a.m. in Hong Kong, Australia & New Zealand Banking Group Ltd. prices show. The gauge is set for its highest close since July 10, according to data provider CMA.
The Markit iTraxx Australia index also increased 5 basis points to 126 as of 10:53 a.m. in Sydney, according to Westpac Banking Corp. prices. The benchmark last closed higher on July 17, according to CMA, which is owned by McGraw-Hill Cos. and compiles prices quoted by dealers in the private market.
U.S. central bankers, who have indicated an improving jobs market could spur cuts to their $85 billion in monthly asset purchases, gather this week in Jackson Hole, Wyoming, to discuss monetary policy. Officials will probably begin to scale back bond buying next month, according to 65 percent of economists surveyed by Bloomberg from Aug. 9-13. The first step may be reducing purchases by $10 billion a month, the median estimate of analysts showed.
Rupee, Sensex
Indonesian shares led declines in emerging Asian markets, after sliding 5.6 percent yesterday when data showed the current-account deficit widened to a record last quarter. A report this month also showed the economy grew less than 6 percent for the first time since 2010 in the second quarter. Yesterday’s slump created buying opportunities in bank and consumer shares, according to PT Schroder Investment Management.
Foreigners sold a net $3 billion of Indian stocks and bonds in July amid the slowest growth in a decade in Asia’s third-largest economy, according to data compiled by Bloomberg. The rupee slid to a record low of 64.12 against the dollar today, while the S&P BSE Sensex index of equities dropped 0.9 percent, extending yesterday’s 1.6 percent decline.
Intraday trading volume in Jakarta is 72 percent more than the 30-day average today while volumes on India’s S&P BSE Sensex Index are 41 percent higher, Bloomberg-compiled data show.
Thailand’s SET Index lost 2.5 percent today after dropping 3.3 percent yesterday following a report showing the economy unexpectedly shrank in the second quarter, pushing the country into a recession. The government also cut its growth forecast.
Crude, Gasoline
The baht weakened 0.9 percent to 31.64 per dollar, declining for a second day. The Korean won depreciated 0.6 percent to 1,122.06 and the ringgit was headed for the weakest close since June 2010, falling to 3.2993 against the greenback.
The Bloomberg Dollar Index, which tracks the greenback against 10 major peers, was up 0.1 percent after rising for a second consecutive business day in New York yesterday, gaining 0.1 percent.
West Texas Intermediate crude was down 0.3 percent at $106.75 a barrel, after falling 0.3 percent yesterday as the threat of a storm in the Gulf of Mexico dissipated, removing a risk to oil and gas production in the area.
Gasoline futures declined a third day, losing 0.4 percent, and contracts on natural gas gained 0.3 percent, rising for a second day.
To contact the reporters on this story: Pratish Narayanan in Singapore at pnarayanan9@bloomberg.net; Emma O’Brien in Wellington at eobrien6@bloomberg.net
To contact the editor responsible for this story: Emma O’Brien at eobrien6@bloomberg.net
