SEOUL: Emerging-market stocks dropped the most in two weeks as foreign direct investment (FDI) in China trailed estimates and lower oil prices dragged down energy producers. The Indian rupee and  Indonesia’s rupiah led declines in currencies.

China Oilfield Services Ltd headed for the biggest retreat in almost six weeks and Russia’s Micex Index dropped 0.5% as crude slid for a third day. Samsung Electronics Co, the world’s biggest smartphone maker, lost 2.7% in Seoul after closing at a three-month high yesterday. The rupee and the rupiah both weakened 0.8% against the dollar while the ruble slipped 0.1%.

The MSCI Emerging Markets Index slumped 0.4% to 997.53 as at 3.07pm in Hong Kong, after surging 1.5% on Monday to the highest level since June 4. The FDI in China rose 0.6% last month, compared with the median estimate of 12.5% growth in a Bloomberg survey. The US Federal Reserve began a two-day policy meeting yesterday, with economists predicting the central bank will trim its monthly bond-buying programme by US$10 billion (RM32.5 billion) to US$75 billion.

“Fed tapering will still take place in September and it’s only a matter of time,” said Daphne Roth, the Singapore-based head of Asian equity research at ABN Amro Private Banking, which oversees about US$207 billion. “Economic growth in some of these emerging countries could surprise on the downside as they cut back on investment and domestic consumption.”

Nine of the 10 industry groups in MSCI’s emerging-markets index slid as gauges of technology and energy companies fell at least 0.7%. The broad measure is valued at 11 times projected 12-month earnings, versus 14 times for the MSCI World Index of developed-nation shares, according to data compiled by Bloomberg.

China’s Shanghai Composite Index led losses among benchmark equity indexes in Asia, falling 1.9%. Shanghai International Port (Group) Co dropped the most in four years after UBS AG downgraded the stock to sell. Shanghai Pudong Development Bank Co paced declines for lenders as a gauge of funding availability in the financial system climbed on demand for cash before local holidays.

“Investors are digesting a recent rally and staying on the sidelines,” said Zeng Xianzhao, an analyst at Everbright Securities Co, in Chongqing.

China Oilfield, a contractor for the nation’s offshore energy industry, dropped 3.8%, its steepest loss since Aug 7. Thai Oil plc retreated 2.5% in Bangkok.

Oil futures fell as much as 0.9% in New York. US Secretary of State John Kerry joined French and UK diplomats in calling for a United Nations resolution to eliminate Syria’s chemical weapons arsenal. Libya restored about 25% of its crude output following talks between the government and striking workers.

Samsung Electronics dropped the most in two months in Seoul. Some investors are locking in profits after a 17% rally from this year’s closing low through Monday, according to Im Jeong Jae, a Seoul-based money manager at Shinhan BNP Asset Management Co, which oversees US$28 billion. The outlook for the company’s consumer electronics business may worsen, said BNP Paribas analyst Peter Yu.

The rupee extended this year’s slide against the dollar to 13% while the rupiah approached the weakest level since 2009.

“The outlook for the rupiah, like other emerging-market currencies, is dependent on how much the Fed is going to do,” said Irene Cheung, a foreign-exchange strategist at Australia & New Zealand Banking Group Ltd in Singapore.  — Bloomberg

This article first appeared in The Edge Financial Daily, on September 18, 2013.