“Emerging-market stocks fell, heading for the biggest drop in more than a week, as growth in Chinese service industries slowed and consumer shares sank amid surging oil prices. South Korea’s won led currencies lower.
Daphne International Holdings Ltd. (210), a footwear retailer, sank the most in four years in Hong Kong as crude climbed above $100 a barrel for the first time since September and the city’s retail sales trailed estimates. Industrial & Commercial Bank of China Ltd. tumbled 2.5 percent.Fubon Financial Holding Co. (2881) slumped 5.1 percent in Taipei after raising $850 million from a share sale. The won and India’s rupee both weakened 0.9 percent versus the dollar, while the ruble fell 0.2 percent, heading for its lowest level in a year.
The MSCI Emerging Markets Index lost 1.6 percent to 916.99 at 2:56 p.m. in Hong Kong, poised for the biggest drop since June 24. Oil’s surge, sparked by political turmoil in Egypt and an industry report showing U.S. stockpiles shrank, threatens to curb consumer spending power and spur inflation for energy-importing countries such as China and India. China’s non-manufacturing purchasing managers’ index fell to 53.9 in June, the lowest level since September, even as the government seeks to boost the economy’s reliance on services.
“Investors are hoping the spike is temporary because a sustained and continued gain in oil prices will hurt economic growth prospects,” said Allan Yu, who helps manage about $10 billion at Manila-based Metropolitan Bank & Trust Co. “Given the size of its economy, a slowdown in China will have an impact on its neighboring markets.”