Global growth slowdown fears grip emerging stocks

Emerging market shares fell heavily on Friday as risk sentiment took a hit after dismal China and US data reiterated global growth slowdown fears, adding to geopolitical and trade worries.

Shares across Asia were well in the red, with mainland China stocks posting their worst day since early to mid-December as China’s January producer prices slowed for the seventh straight month, spurring worries of deflation.

“The more concerning figure is the producer price numbers which is sometimes correlated with the Chinese profit numbers,” said Rob Carnell, Chief Economist & Head of Research, Asia-Pacific, ING.

This came after weak retail sales in the United States overnight, and US trade negotiator Larry Kudlow saying no decision to extend the March 1 deadline to strike a trade deal with China had been made yet.

U.S. tariffs on $200 billion worth of imports from China are scheduled to rise to 25 percent from 10 percent if the two sides cannot reach a deal by the deadline.

“We’ve been running on a prospect of things looking much more promising...and now we still don’t know what’s going to happen,” Carnell said.

The MSCI index of emerging market stocks fell 0.8 percent. Stocks in South Africa shed 1 percent, while those in Turkey declined 0.8 percent. Russian shares recovered after two sessions of losses.

Among currencies, India’s rupee saw its biggest drop since first trading day of the year as investor sentiment took a beating on rising diplomatic tensions between the two nations. (RTRS)