Asian emerging currencies slide as commodities drop on China growth woes

Pedestrians walking past an electronic stock board outside a securities firm in Tokyo.
Pedestrians walking past an electronic stock board outside a securities firm in Tokyo.PHOTO: BLOOMBERG

TOKYO (BLOOMBERG) - Emerging-market currencies in Asia tumbled on Tuesday (Oct 20), with the Korean won and Malaysian ringgit sliding the most in at least a month after renewed anxiety over China stoked a selloff in commodities and a Federal Reserve official talked up the outlook for higher rates.

Both the won and the ringgit dropped more than 1 per cent as nickel extended declines while US crude held below US$47 a barrel ahead of American stockpiles data. The Australian dollar rallied after policy makers said rate cuts earlier this year supported demand.

Japan's Topix index rose 0.2 per cent by 9:36 am in Tokyo, limiting losses in the MSCI Asia Pacific Index, which dropped 0.1 per cent.

A gauge of Asian equities excluding Japan slipped 0.4 per cent after rising the past three days, as energy and materials producers pushed Australia's S&P/ASX 200 Index down 0.4 per cent and the Kospi index lost 0.1 per cent in Seoul.

Singapore's Straits Times Index dipped 0.05 per cent to 3,022.84 as of 9:19 am.

While data on Monday indicated Chinese economic growth was slightly faster than analysts expected, it was still the slowest expansion since the global financial crisis, reigniting concerns that made last quarter the most volatile since 2011.

"The three-week recovery is approaching an exhaustion point," Matthew Sherwood, head of investment strategy at Perpetual Ltd. in Sydney, which manages about US$21 billion, wrote in an e-mail to clients. "The key question for investors is how much can growth accelerate in the December quarter and will there be more policy stimulus. The answer to both questions is - not a lot," he said, referring to China's economy.

The October rally that has restored more than US$4 trillion to the value of global equities looks to be faltering as the concerns that drove last quarter's gyrations reassert themselves. Anxiety over the slowdown in China, the world's biggest consumer of industrial metals and a key oil importer, sent commodity prices down the most in a month on Monday, while the US dollar regained some ground after Fed Bank of San Francisco chief John Williams said the central bank should probably start boosting rates later this year.

Futures on the Standard & Poor's 500 Index lost 0.2 per cent to 2,024.50 after the US benchmark added less than 0.1 per cent on Monday to remain at an eight-week high as gains in consumer stocks offset losses for commodity producers.

Hang Seng Index futures in Hong Kong were down 0.3 per cent, and contracts on the Hang Seng China Enterprises Index, a gauge of mainland stocks listed in the city, dropped 0.4 per cent. FTSE China A50 Index futures slipped at least 0.5 per cent with those on the CSI 300 Index.

Futures on Taiwan's Taiex gauge climbed 0.2 per cent before details of a potential merger between SanDisk Corp. and Western Digital Corp., both makers of data storage, emerged after US markets closed. SanDisk is in advanced talks to sell itself to Western Digital, with 2015 a record year for semiconductor mergers and acquisitions.

Semiconductor and semiconductor equipment manufacturers are the biggest group on the Taiex, according to index weightings calculated by Bloomberg.