Emerging-Market Stocks Fall Most in Seven Weeks on China, India Concerns

[DesiGuy]

Emerging-market stocks fell, sending the benchmark index to its biggest drop in seven weeks, on speculation China is stepping up efforts to cool its economy and as India’s factory output grew at a slower pace.

The MSCI Emerging Markets Index lost 1 percent to 1,096.33 as of 3:05 p.m. in Singapore, set for its biggest decline since Aug. 25. The MSCI China Index, tracking mainly Hong Kong-traded Chinese stocks, fell 0.4 percent and the Bombay Stock Exchange’s Sensitive Index declined 0.9 percent. The Shanghai Composite Index rallied for a third day after a weeklong holiday. South Korea’s won paced losses by currencies on speculation policy makers will intervene to check appreciation.

China boosted reserve requirements for six large commercial banks by half a percentage point for two months, a move that Deutsche Bank AG said may add to the possibility of an interest- rate increase. The tightening of liquidity in China runs counter to efforts by central banks in other major economies to boost growth, with Japan’s Finance Minister Yoshihiko Noda saying his government is ready to take “bold action” on currencies.

“Central banks all want the same thing, which is to preserve growth and at the same time make sure that they don’t lose out when other countries try to weaken their currencies,” said Venkatraman Anantha-Nageswaran, Singapore-based global chief investment officer at Bank Julius Baer & Co., which oversees $140 billion. “There are no easy answers for fostering growth.”

The won fell to 1,124.55 per dollar, while China’s yuan declined 0.1 percent, the most in almost two months, to 6.6755. Thailand’s baht traded steady at 30.05 as Finance Minister Korn Chatikavanij said the Cabinet would consider measures to slow fund inflows into the country.

ICBC Falls

Industrial & Commercial Bank of China Ltd., the world’s largest lender by market value, dropped 1.2 percent in Hong Kong and Agricultural Bank of China Ltd. retreated 1 percent.

Pressure for an “asymmetric rate hike” or liberalization of deposit rates will increase after the central bank raised the reserve requirement ratio and given rising inflation in September and a recent rebound in stock and property prices, Deutsche Bank analysts led by Jun Ma said in a report today.

Chinese energy and metal producers rose, with Yanzhou Coal Mining Co. and Jiangxi Copper Co. both advancing by or near their daily limit of 10 percent on each of the last three trading days in Shanghai. The gains helped the Shanghai Composite Index rebound from earlier losses to climb 1.2 percent, taking its gains from the July 5 low to 20 percent. The market was closed from Sept. 30 to Oct. 7, during which the MSCI Emerging Markets Materials Index rallied 2.6 percent.

Curb Lending

The Shanghai index is still 13 percent lower for the year, Asia’s worst performer. China’s economy grew more than 10 percent for three straight quarters, prompting the government to take steps to curb lending and cool real estate speculation.

Larsen & Toubro Ltd., India’s largest engineering company, retreated 2 percent after the nation’s industrial production growth slowed to a 5.6 percent pace in August after a revised 15.2 percent increase in July. The median estimate of 25 economists in a Bloomberg News survey was for a 9.5 percent gain in August.

Emerging-Market Stocks Fall Most in Seven Weeks on China, India Concerns - Bloomberg

 

[CardSharp]

Stocks fundamentals are generally meaningless and barely correlates to actually economic performance. If you want long term investment, buying and hold stocks is a bad idea.

 

[bandit]

Stocks fundamentals are generally meaningless and barely correlates to actually economic performance. .

This is a misconception, though very widely believed. Stock prices may vary from fundamentals for short term but over long terms they tend to reflect the fundamental price of the firm.

If you want long term investment, buying and hold stocks is a bad idea

Stocks are the best investment for long term, people usually don't hold them long enough to get the real benefit of their return, some part being attributable to irrational behavior currently under study as behavioral finance.

See this last 100 years returns for 1 $ of US stocks vs other assets and inflation. The top line is for stocks, follwed by bonds, bills and inflation. As you can see, 1$ of stock becomes $15,579, outperforming every other asset by a big margin. This is true of a cross section of developed countries.

 

[CardSharp]

Those charts are slick and bankers keep them around to show gullible clients but notice how they always start in in the 1900's or 1950's. Those times and those growth aren't relevant anymore to the current economic situation. If you chart blue-chip stocks growth since 2001, 2003, growth has been pretty much flat and returns dismal. (see that lovely little dip in 2001? if you extend your time scale to 2008, 2009, it gets a lot worse)

We should get topjumper in here, he probably know way more than either of us.

 

[bandit]

Those charts are slick and bankers keep them around to show gullible clients but notice how they always start in in the 1900's or 1950's. Those times and those growth aren't relevant anymore to the current economic situation. If you chart blue-chip stocks growth since 2001, 2003, growth has been pretty much flat and returns dismal. (see that lovely little dip in 2001? if you extend your time scale to 2008, 2009, it gets a lot worse)

We should get topjumper in here, he probably know way more than either of us.

You don't seem to like bankers very much, but thats all right, most people don't after 2008.

That chart showed upto 2000 because I was feeling lazy and copied it from a book, any ways here is a more recent and shorter time period if you like it so. Remember its long term we are discussing here, and keep in mind that investments in any other asset class are to be compared. During the period 2008-2009 every asset performed badly, so stocks aren't the only losers.

Here's another chart for 1990-09, its still a 400% return over a 20 year period which is fairly long term.
Oh and it is for S&P 500, blue chips.

 

[CardSharp]

You don't seem to like bankers very much, but thats all right, most prople don't after 2008.
That chart showed upto 2000 because I was feeling lazy and copied it from a book, any ways heres a more recent and shorter time period if you like it so. Remember its long term we are discussing here, and keep in mind that investments in any other asset class are to be compared. During the period 2008-2009 every asset performed badly, so stocks aren't the only losers.

Here's another chart for 1990-09, its still a 400% return over a 20 year period which is fairly long term.

You can't invest with a time machine. You can use different time scales to say you made money but the only timescale that is relevant is now and there is still risk ahead seeing as nothing was fixed after the 2008 crisis.

I'll restate/correct what I said say before. I can't tell you absolutely that stocks are not a good investment but I'd like to point that the risk is greater in a volatile market and that the vast majority of laymen loses money in the stock market period.

 

[bandit]

You can't invest with a time machine. You can use different time scales to say you made money but the only timescale that is relevant is now and there is still risk ahead seeing as nothing was fixed after the 2008 crisis.

I'll restate/correct what I said say before. I can't tell you absolutely that stocks are not a good investment but I'd like to point that the risk is greater in a volatile market and that the vast majority of laymen loses money in the stock market period.

See if anybody indulges in anything he doesn't have much understanding about, he's gonna get burned.
Thats the problem with the markets, too many laymen trying their luck at making fast money, and get burned; the markets get blamed for their losses.

This can turn into a long discussion, but lets say people tend to shift blame for their own misunderstandings of the market, its not luck but as much of a science as chemistry.

P.S.- pardon me if I came in too heavy with the charts and technicalities, but I just love these things.

 

[CardSharp]

See if anybody indulges in anything he doesn't have much understanding about, he's gonna get burned.
Thats the problem with the markets, too many laymen trying their luck at making fast money, and get burned; the markets get blamed for their losses.

This can turn into a long discussion, but lets say people tend to shift blame for their own misunderstandings of the market, its not luck but as much of a science as chemistry.

P.S.- pardon me if I came in too heavy with the charts and technicalities, but I just love these things.

I love charts, they are awesome.