Emerging Stocks Fall, Heading for Biggest Monthly Loss in a Year

Emerging-market stocks fell, heading for the biggest monthly loss in a year, as India's economy grew less than 5 percent for a second quarter and investors awaited the release of Chinese manufacturing data.

Utility shares led declines, with Huaneng Power International Inc., a unit of China's largest electricity producer, dropping 3.1 percent. HDFC Bank Ltd., India's most valuable lender, tumbled the most in two months. Shangdong Weigao Group Medical Polymer Co. jumped 14 percent after profit increased. India's rupee weakened, heading for its biggest monthly loss in 12 months.

The MSCI Emerging Markets Index lost 0.3 percent to 1,012.93 at 2:44 p.m. in Hong Kong, bound for its lowest close since April 23. The gauge has slumped 2.5 percent in May and most developing-nation currencies have fallen amid concern the Federal Reserve will reduce debt purchases as the economy recovers.

"Investors are concerned about the pace of recovery in China and the chance the Fed may scale back stimulus," Laurentia Amica Darmawan, who helps manage $530 million at PT First State Investment Indonesia, said by phone in Jakarta.

India's S&P BSE Sensex sank 1.2 percent, the most in a week and paring a monthly advance. HDFC Bank retreated 2.6 percent from a record to 206 rupees.

The nation's economy grew 4.8 percent in January through March from a year earlier, up from a revised 4.7 percent in the previous quarter, the government said today. The report matched the median of 33 estimates in a Bloomberg News survey. GDP climbed 5 percent in the 12 months ended March, below the past decade's average of about 8 percent.

The rupee weakened 0.2 percent to 56.47 per dollar, taking its decline this month to 4.9 percent, on concern any reduction in bond-buying by the Fed will curb dollar supply, leaving the Asian currency vulnerable to a record current-account deficit.

Fed Policy

Fed Chairman Ben S. Bernanke said last week the central bank could reduce the pace of bond purchases if there is a sustained improvement in growth.

Foreign funds were net sellers of stocks in Indonesia, Taiwan, Thailand and the Philippines this week. Global investors pulled $224 million from emerging-market bond funds in the week through May 29, Morgan Stanley said in a report yesterday, citing data published by EPFR Global.

A gauge tracking utility companies on MSCI's developing-nation index declined 0.8 percent, the among the 10 industry groups. Huaneng Power retreated 3.2 percent to HK$8.

China Manufacturing

Data tomorrow will show China's purchasing managers index fell to 50 from 50.6 the previous month, according to the median estimate of economists in a Bloomberg survey. The 50 level divides expansion and contraction.

The Hang Seng China Enterprises Index (HSCEI) slumped 0.8 percent, taking its loss for May to 2.8 percent.

Shangdong Weigao Group Medical Polymer jumped 17 percent to HK$9.63. First-quarter net income rose to 228 million yuan ($37.2 million) from 214 million yuan a year earlier.

The MSCI Emerging Markets Index's loss this month compares with a 1 percent gain in the MSCI World Index of developed countries and a 0.4 percent drop in the Standard & Poor's GSCI gauge of 24 commodities.

Thailand's baht fell 2.8 percent this month and the Philippine peso declined 2.7 percent, reaching an 11-month low yesterday.