Emerging Stocks Extend Worst Slump Since 2008 on French Election

Emerging-market stocks extended the longest string of weekly declines since 2008 after French Socialist Francois Hollande was elected President, U.S. employers added fewer jobs and Taiwan’s inflation accelerated.

PetroChina Co. (857) retreated the most in five weeks in Hong Kong trading after the Shanghai Securities News said gasoline prices may be cut. China Vanke Co. (000002) and Poly Real Estate Group Co. led declines for property developers in Shanghai after the Xinhua News Agency reported Industrial & Commercial Bank of China Ltd. suspended a discount on mortgages for first-time home buyers nationwide. Cathay Financial Holding Co., Taiwan’s largest financial services company, retreated 2.8 percent.

The MSCI Emerging Markets Index (MXEF) lost 1.5 percent to 998.21 as of 10:49 a.m. in Singapore, heading for its biggest slump since April 4. The index dropped for a seventh week last week after U.S. Labor Department data on May 4 showed U.S. payrolls climbed by 115,000 in April, below economists’ estimates for a 160,000 advance. The Hang Seng China Enterprises Index (HSCEI) of Chinese companies listed in Hong Kong lost 2.4 percent. Taiwan’s Taiex Index dropped 2.3 percent, while South Korea’s Kospi Index (KOSPI) fell 1.7 percent.

The U.S. data and the French presidential election are sending “jitters through the Asian markets today,” Vasu Menon, vice president for wealth management at Oversea-Chinese Banking Corp. in Singapore, said in a Bloomberg television interview. “If the market pulls back another 5 percent, 8 percent, you will see bargain hunters coming back to bargain hunt for stocks because the fundamentals for Asia are still fairly strong.”

European Debt

The MSCI’s developing nations index, which has gained 9 percent this year, is valued at 10.4 times estimated profit, a 15 percent discount to the MSCI World Index’s multiple of 12.4, according to data compiled by Bloomberg.

Hollande, the first Socialist in 17 years to control Europe’s second-biggest economy, pledged to push for less austerity. Hollande got about 52 percent against about 48 percent for Nicolas Sarkozy, according to estimates by four pollsters. His platform calls for policies German Chancellor Angela Merkel opposes, including increased spending and a delayed deficit-reduction effort.

Taiwan’s consumer-price index climbed 1.44 percent in April from a year earlier, compared with a revised 1.25 percent increase in March, the statistics bureau said in Taipei today. The median of 12 estimates in a Bloomberg News survey was for a 1.41 percent gain.

Taiwan Semiconductor Manufacturing Co., the company with the biggest weighting on the Taiex, slid 2.9 percent. Cathay Financial Holding retreated 2.8 percent.

Developers Slump

PetroChina decreased 2.8 percent. The Shanghai Securities News reported gasoline and diesel prices may drop by 300 yuan per ton, or 0.22-0.26 yuan a liter, citing Hu Huichun, an analyst at researcher Chem99.com.

Vanke, the nation’s largest listed property developer, fell 2 percent. Poly Real Estate, the second biggest, dropped 0.5 percent. ICBC, the largest lender, notified its borrowers of scrapping the mortgage rate discount by phone last week, Xinhua reported. The suspension was made amid tighter liquidity and “deposit instability,” according to Sophie Jiang, banking analyst at Religare Capital Markets.

Related articles

• US STOCKS-Futures hit after European elections (reuters.com)
• Hollande beats Sarkozy in election according to exit polls: French media (dailystar.com.lb)
• Tokyo stocks tumble after European elections (business.inquirer.net)