China Sparks Drop in Emerging-Market Stocks; Oil, Copper Fall

Discussion in 'Economics' started by ByLoSellHi, Jul 29, 2009.

  1. China Sparks Drop in Emerging-Market Stocks; Oil, Copper Fall
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    By Gavin Serkin and Laura Cochrane

    July 29 (Bloomberg) --
    Chinese stocks plunged the most in eight months, dragging emerging markets lower, on speculation the government will curb investment to prevent a bubble. Oil led a drop in commodities.

    The Shanghai Composite Index fell 5 percent, its biggest decline since Nov. 18, snapping a five-day, 7 percent advance. The MSCI Emerging Markets Index sank 1.2 percent to 826.68 at 11:50 a.m. in London, the lowest level since July 13. Oil and copper fell the most in three weeks. The yen and the dollar rose as investors shunned higher-yielding currencies.

    “Speculation the central bank may take steps to rein in liquidity worried the market,” said Gabriel Gondard, deputy chief investment officer at Fortune SGAM Fund Management Co., which oversees about $7.2 billion in assets. “A lot of people were looking to take profits” in China, he said.

    Chinese stocks are trading at 35.3 times reported earnings, more than twice the average in emerging markets, after a 79 percent surge in the Shanghai index this year on prospects for a global economic rebound. Federal Reserve Bank of San Francisco President Janet Yellen said yesterday the U.S. economy’s recovery is likely to be “painfully slow” as consumers spend less and save more....

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