(BFW) Roche’s ACE910 Could Have ’Major’ Impact on Baxalta: UBS

Roche’s ACE910 Could Have ’Major’ Impact on Baxalta: UBS
2015-08-21 07:07:24.972 GMT


By Allison Connolly
(Bloomberg) -- Roche’s ACE910 has potential to be a
“gamechanger” in hemophilia and could have “major impact” on
Baxalta, UBS says in note.

* Cites survey conducted by UBS Evidence Lab in collaboration
with the Global UBS Healthcare team among 80 haemophilia A
patients
* 39% of patients stated they’d switch within 6 months of
launch, 55% within the 1st year, and 63% of patients
within the first 2 yrs
* Says downside scenario would take 40% off Baxalta stand-
alone consensus est. from 2021, reducing EPS accretion for
Shire/Baxalta by 12% & 23% in 2020 and 2023
* Says original Shire proposal (including buyback) would
still be almost EPS neutral for Shire from 2018-2023
even in this downside scenario with no cost synergies
* Notes Biogen’s Eloctate has taken 1 yr to gain just 5%
market share, supporting Shire’s argument of market
stability in hemophilia; yet new long-acting Alprolix has
taken 33% of the Factor IX market in 1 yr
* Says Shire still faces “great difficulty” in getting
Baxalta deal done; questions whether merger would lead to
divestment of GI or ADHD products

For Related News and Information:
First Word scrolling panel: FIRST<GO>
First Word newswire: NH BFW<GO>

To contact the reporter on this story:
Allison Connolly in London at +44-20-3525-7043 or
aconnolly4@bloomberg.net
To contact the editor responsible for this story:
James Ludden at +44-20-3525-2645 or
jludden@bloomberg.net

(BofA-ML) Flow Show : largest equity outflows in 15 weeks ($8.3bn)

--> Flight-to-safety: largest equity outflows in 15 weeks ($8.3bn); 7 straight weeks of inflows to Govt/Tsy funds (longest inflow streak since Nov’12); 3 straight weeks of inflows to money-market funds

--> EM exodus: largest weekly outflows from EM debt funds since Jan’14 ($2.5bn) (Chart 1);
7 straight weeks of outflows from EM equity funds (totaling $26bn)

--> Our Bull & Bear Index: falls deeper into “fear” territory… now at 1.4…bearish positioning remains one of the only reasons to be bullish risk assets right now (see below)



*** Asset Class Flows
* Equities: $8.3bn outflows (largest outflows in 15 weeks) (first outflows in 7 weeks)
* Bonds: $1.2bn outflows (2 straight weeks)
* Money-markets: $8.2bn inflows (3 straight weeks = already the longest inflow streak since Nov’14)
* Precious Metals: ekes out small inflows ($18mn) for second straight week

*** Equity Flows
* EM: $6.0bn outflows (largest in 5w) (6w outflows = $26bn)
* US: $6.6bn outflows ($120bn outflows YTD)
* Europe: $2.8bn inflows (14 straight weeks)
* Japan: $0.9bn inflows (inflows in 24 out of past 26 weeks)

*** Fixed Income Flows
* $2.5bn outflows from EM debt funds (largest since Jan’14); bulk of outflows via EM local currency funds
* $2.5bn inflows to govt/tsy funds (7 straight weeks)
* $0.8bn outflows from HY bond funds (4 straight weeks)
* 4 straight weeks of outflows from TIPS ($0.3bn)
* Small $38mn outflows from IG bond funds

(DBK) Eur. Equity Strat. : The Dax EPS Achilles Heel : China

Fears over China-related EPS risks get priced aggressively – in part overdone?
Concerns around growth dynamics outside of Europe (especially in EMs/China) and spill-over effects on European growth itself weigh on equity sentiment and the DAX in particular given its 15-20% EM sales exposure and cyclical nature. We estimate China’s contribution to DAX sales at 9% and EPS at 15% (due to higher margins, FY’14). About 3/4 of those 15% come from Autos (11.5%), while other sectors with meaningful China exposure are less relevant due to a significantly lower overall EPS contribution: Chemicals (1.7%), P&HG (0.6%), IG&S (0.5%), HC (0.4%), Tech (0.2%), Insurance (0.1%). So what’s in the price?

(1) DAX EPS – Mkt implied cuts seem overdone given our macro base case:
DAX Autos represent the index’ Achilles’ heel as their China-exposed EPS are
highly sensitive to volumes/pricing in that market. DB’s Auto team estimates
the market currently prices a 45% cut in DAX Auto EPS for 16E, which we
think may be overdone (top right chart).

So far, i) a decent credit impulse for China in Q3 (w/ +ve implications for credit
growth and in turn local car sales), ii) sequentially recovering leading indicators
(middle right chart) and iii) reassuring takeaways from our China economist on
meetings with local institutions (details) keep us from cutting DAX EPS beyond
DB’s macro base case in 15E (China GDP at 7.0% and global growth at 3.2%).

We take a more conservative stance on 16E though (global growth of 3.5% vs.
DB’s house view of 3.7%), which is in-line with considering the Auto team’s
worst case of -5% volume/pricing y/y for China’s market in 16E (details). This
equates to a 10% cut to Auto EPS and takes 3.5% off of DAX consensus EPS.
Assuming a 10% cut to other sectors with China-exposed EPS, a total 4% cut
to DAX EPS seems appropriate. This pushes our DAX fwd EPS targets lower to
860 in 15E (prev.: 865) / 925 in 16E (prev.: 950) (2% / 3% below consensus).

(2) DAX valuation – Mkt fears at odds with underlying macro data surprises:
While consensus EPS revisions in fwd estimates remained flat over the past
month post a decent 2Q’15 reporting, the DAX fell 10% over fears that China’s
growth story has come to an end, which the slump in oil prices and the
PBOC’s RMB devaluation (assumingly to counter weaker growth) may indicate.

This seems at odds with the level of relevant economic data surprises to which
changes in the DAX’ risk premium are highly correlated (bottom right chart). If
our macro case holds, then today’s 8% premium level should return to its longterm
median (7.2%) till year-end. Nevertheless, we lower our projections for a
recovery in inflation expectations and, with it, the path of lower trending DAX
fwd target PEs: Now 13.2x in 15E (prev.: 13.8x) and 13.1x in 16E (prev.: 13.3x).

(3) DAX targets: Hence, we lower our DAX YE’15E-16E index targets to 11,300
(prev.: 12,000) and 12,100 (prev.: 12,600), respectively, but remain above spot.

(Barcap) European Luxury : July Swiss Watch Exports : *European Luxury Goods: Ju

*European Luxury Goods: July Swiss watch exports: Overall -9.3%, high end -7.5%
Swiss watch exports for July plunged by -9.3% y/y (vs. June +3.3%) due to significant declines in Asian markets - the steepest since November 2009. Despite the main Asian markets reporting sluggish growth and continued weak performance in Hong Kong and China as a result of high exports last year, Europe continues to gather momentum and is still being upheld by strong tourism spend into the region as shown by Global Blue data. Japan declined moderately whilst Korea continues to be impacted by the MERS outbreak. All price segments experienced a negative trend in the month, with the 200-500 CHF category worst affected and down -14.5% in value terms. We continue to believe in the long- term growth of Swiss watches but accept the short-term prospects are difficult.

>>> What to look at today - 21st of August 2015

Dow-2.06% S&P-2.10% Nasdaq-2.82% Russell-2.51% FXI -2.47% VIX 19.18 +25.51%
US Market closed lower for a third day in a row and record biggest loss since Feb. 2014, VIX is up 25.5%, lot of doubts remain in the market ahead of Sept. FED...rate-hike speculation, concerns about the global economy, plunging commodity prices, Greece, China,...A.Tsipras resigned and called for snap elections on Sept. 20th...all ten sectors closed lower...Energy performed better than other sectors thanks to Crude that ended little change at $41.26...Large TEch names were heavily down, TWTR -5.83% closed on its IPO ($26) Price after trading below during the session...volume were above average at 900mil shares, Salesforce.com beats by $0.02, beats on revs; guides Q3 EPS in-line, revs above consensus; guides FY16 EPS in-line, revs above consensus -->+3.7% in after hours, Hewlett-Packard beats by $0.03, reports revs in-line; guides Q4 EPS below consensus; separation on track --> +0.2% in after hours...US After Hours UEPS +9.0%, CRM +3.7%, HPQ +0.2%, TFM -11.5%, ROST -9.5%, CRMT -6.4%, INTU -2.9% following earnings/guidance...China's August preliminary manufacturing PMI missed consensus by over a point and was the lowest level in nearly 6 1/2 years, remaining in contraction for the 6th straight month. The survey's key output component fared even worse at 46.6 - the lowest level since late 2011. S&P futures were up 3pts ahead of the release but fell as much as 12pts to fresh 6-month lows below 2,009 after the data. Earlier, a financial press report speculated that Pres Xi could shift focus from GDP to population growth, targeting GDP rate of growth of 6.5-7.0% while also considering lifting restriction on family size. This marked the 3rd straight day of press speculation about reduced Chinese growth outlook. Citigroup also cut its 2015 and 2016 GDP targets below the 7% official threshold to 6.8% and 6.3% respectively. Japan manufacturing PMI rose to a 7-month high as new order growth accelerated, but that result hardly had much impact, as risk aversion was just as punishing for Tokyo stocks. Yen rally was largely on safe-haven demand that also boosted CHF, US Treasuries, and Gold (added $15 in the electronic session to approach $1,170 on top of the $35 gained over the past 2 sessions). North Korea's Kim put his military on high alert in response to propaganda loudspeakers from the South after the two sides exchanged shell fire overnight. Reports added that the North is moving artillery close to the border.

Nikkei -2.76% Hang Seng -2.23% Shanghai -2.48%

Eur$ 1.1284 CNY $6.3983 JPY 122.92 GBP1.5696 EURCHF 1.0798 RUB $67.99 WTI $40.80(-1.26%) GOLDS $1,165(+1.12%)

S&P 2,013 (-0.60%) EuroStoxx-2.30% Dax -2.55% SMI-1.46%

Macro :
- Yellen's Fed Faces A Changed Economic Reality After July Meeting
- Goldman Sees Hedge Funds Playing Defense as Global Outlook Dims

Keep an eye on :
- ADEN VX : Adecco Names Hans Ploos van Amstel CFO as of Sept. 1
- AFR LN : Oriental Says to Take Control of Afren’s Ebok Field by Aug. 31
- AFR LN : Afren’s Ebok Field Transition Plan Triggered by Insolvency
- ATC NA : EuroPacific Growth Fund’s Stake in Altice Falls to 4.92%: Filing
- ATC NA : Altice values telcos at EUR 115m instead of reported EUR 380m - Diario Economico
- MT NA : ArcelorMittal Defers Kazakh Salary Cuts After Tenge Devaluation
- AMS SW : AMS to Build $2b Manufacturing Plant in New York State
- DETNOR NO : Det Norske Says Will Await Outcome of Sverdrup Complaint
- HPL GY : Hapag Lloyd Plans IPO for October, Reuters Reports
- ISN SW : Intershop Names Jochen Wiechen as New CEO
- KOG NO : Kongsberg 2Q Slightly Above Est.; Oil & Gas Tech Capacity Adj.
- KUNN SW : Kuoni Sees 2015 Ebit of CHF40m-CHF50m
- MAU FP : Maurel & Prom Starts Mnazi Bay Tanzanian Gas Output From 2 Wells
- MEO GY : Metro Says No Answer Received From Convergenta on MSH Stake
- NOVN VX : Novartis to Buy Remaining Rights to GSK’s Ofatumumab
- NOVN VX : Novartis’s Sandoz Wins Ruling Invalidating Velcade Patent
- SZG GY : Salzgitter Unit Under Investigation for Corruption: Sueddeutsche
- TNTE NA : FedEx Offer for TNT: Acceptance Period Starts Aug. 24
- FP FP : Total Faces Trial Over 2009 Carling Plant Deaths: Le Parisien
- URKA LI : Uralkali Weighs New Share Buyback, Delisting From LSE: Vedomosti
- VPK NA : Vopak 1H Net EU162m Up 17% Y/y; Maintains FY Ebitda Guidance
- ZURN VX : Zurich Insurance Hires Evercore for Possible RSA Bid: FT

>>> Europe : Brokers Upgrades & Downgrades - 21st of August 2015

>>> Up
*ADIDAS RAISED TO NEUTRAL VS SELL AT GOLDMAN
*ECORODOVIAS RAISED TO OVERWEIGHT AT JPMORGAN
*SIG RAISED TO BUY VS HOLD AT LIBERUM {NSN NTF49Z6JTSEK<Go>}
*SUNRISE COMMUNICATIONS RAISED TO NEUTRAL VS SELL AT CITI
*UNITED POWER RAISED TO HOLD VS REDUCE AT KEPLER CHEUVREUX

>>> Down
*LUFTHANSA CUT TO SELL VS NEUTRAL AT GOLDMAN ( note attached)
*LUXOTTICA CUT TO SELL VS NEUTRAL AT GOLDMAN
*NORTHGATE CUT TO SELL VS BUY AT BERENBERG
*OXFORD INSTRUMENTS CUT TO SELL VS HOLD AT BERENBERG
*REPSOL CUT TO EQUALWEIGHT VS OVERWEIGHT AT BARCLAYS
*TOPPS TILES CUT TO HOLD VS BUY AT BERENBERG
*WIENERBERGER CUT TO NEUTRAL VS BUY AT CITI {NSN NTF4CY6S972C<Go>}

>>> PT Change
*UNITED POWER PT CUT TO EU0.8 VS EU1.1 AT KEPLER CHEUVREUX

>>> Initiation
*ALENT (EW) Raise PT to 503p from 390p AT BARCAP (Note attached)
*ALDERMORE RATED NEW OVERWEIGHT AT JPMORGAN, PT 325P
*CAIRN HOMES RATED NEW BUY AT GOODBODY, PT EU1.35
*CRODA (EW) Raise PT to 3200p from 3000p AT BARCAP
*DSM (EW) Lower PT to €52.00 from €53.00 AT BARCAP
*EVONIK Lower PT to €38.00 from €39.00 AT BARCAP
*SOLVAY (OW) Lower PT to €150.00 from €154.00 AT BARCAP
*VICTREX (OW) Lower PT to 2300p from 2400p AT BARCAP

>>> Call
>> Stock
*ANGLO AMERICAN ADDED TO LIBERUM’S CONVICTION SELL LIST
*BABCOCK REMOVED FROM LIBERUM’S CONVICTION SELL LIST
*GLENCORE REMOVED FROM LIBERUM’S CONVICTION SELL LIST
*PUBLICIS ADDED TO LIBERUM’S CONVICTION SELL LIST

>>> Altice values telcos at EUR 115m instead of reported EUR 380m

Altice values telcos at EUR 115m instead of reported EUR 380m 

Altice values its Portuguese assets Cabovisao and Oni at EUR 115m, rather than the reported EUR 380m, reported Diario Economico. The Lisbon business paper cited Altice's 1H15 performance update, according to which the book value of Cabovisao is EUR 97.1m and Oni worth EUR 49.1m.

Obliged by EU regulators to divest the two Portuguese telcos as part of its EUR 7.4bn purchase of PT Portugal, Altice had previously expected to raise EUR 300m from Cabovisao and EUR 80m from Oni. The EU-imposed deadline for the disposal of the two firms by Altice has been successively pushed back from the end of June.

Vodafone Portugal is said to be a Cabovisao suitor, while Oni is being eyed by Portuguese telco NOS, the report said. StarTimes of China is no longer interested in Alrice's Portuguese operations.

Diario Economico

>>> Asian Update

Asian Mid-session Update: 6-year low in China flash PMI exacerbates risk aversion


***Economic Data***
- (CN) CHINA AUG CAIXIN/MARKIT FLASH MANUFACTURING PMI: 47.1 V 48.2E (lowest since Mar 2009; 6th straight month of contraction)
- (JP) JAPAN AUG MARKIT FLASH PRELIMINARY MANUFACTURING PMI: 51.9 V 51.2 PRIOR (7-month high, 4th straight expansion)
- (NZ) New Zealand July Net Migration: 5.7K (new record) v 4.8K prior
- (US) NORTH AMERICA JULY SEMI BOOK/BILL RATIO: 1.02 V 0.98 PRIOR; First print above parity in 3 months

***Index Snapshot (as of 02:30 GMT)***
- Nikkei225 -2.1%, S&P/ASX -1.8%, Kospi -1.6%, Shanghai Composite -1.8%, Hang Seng -2.1%, Sept S&P500 -0.8% at 2,009

***Commodities/Fixed Income***
- Dec gold +0.8% at $1,162/oz, Oct crude oil -1.5% at $40.74/brl, Sept copper -0.3% at $2.31/lb
- GLD: SPDR Gold Trust ETF daily holdings rise 3.5 tonnes to 675.4 tonnes
- USD/CNY: (CN) PBoC sets yuan mid point at 6.3864 v 6.3915 prior setting; 6th straight firmer Yuan setting; 2nd straight firmer setting relative to close; Strongest setting since devaluation last week
- USD/CNY: (CN) PBoC may increase overseas access to onshore Yuan market - China Daily
- (AU) Australia MoF (AOFM) sells A$800M in 3.25% 2018 Bonds; avg yield: 1.8351%; bid-to-cover: 4.54x
- (JP) BOJ offers to buy ¥375B in 1-3yr JGBs, ¥425B in 3-5yr JGBs, ¥400B in 5-10yr JGBs

***Market Focal Points/FX***
- If the US market selloff on Thursday - the biggest in 18 months - was driven by the growing fears of a slowdown in China, investors should prepare for more of the same on Friday. China's August preliminary manufacturing PMI missed consensus by over a point and was the lowest level in nearly 6 1/2 years, remaining in contraction for the 6th straight month. The survey's key output component fared even worse at 46.6 - the lowest level since late 2011. Other notable components saw both New Export Orders and Employment also declining at a faster rate. Indeed, S&P futures were up 3pts ahead of the release but fell as much as 12pts to fresh 6-month lows below 2,009 after the data. Earlier, a financial press report speculated that Pres Xi could shift focus from GDP to population growth, targeting GDP rate of growth of 6.5-7.0% while also considering lifting restriction on family size. This marked the 3rd straight day of press speculation about reduced Chinese growth outlook. Meanwhile Citigroup also cut its 2015 and 2016 GDP targets below the 7% official threshold to 6.8% and 6.3% respectively.

- Japan manufacturing PMI rose to a 7-month high as new order growth accelerated, but that result hardly had much impact, as risk aversion was just as punishing for Tokyo stocks. Japanese Yen saw a bid across the board, with USD/JPY falling some 70pips below 122.90 and AUD/JPY fell 80pips below 89.80. However, Yen rally was largely on safe-haven demand that also boosted CHF, US Treasuries, and Gold. The rally in the latter has been particularly impressive, as it added $15 in the electronic session to approach $1,170 on top of the $35 gained over the past 2 sessions. AUD and NZD were also predictably punished against the greenback, falling 50pips and 30pips respectively. The tremors from the rout in Asian EM FX was also felt as far as North America - MXN hit new multi-year lows trading through 16.85.

- Geopolitical jitters are adding to the bearish case. North Korea's Kim put his military on high alert in response to propaganda loudspeakers from the South after the two sides exchanged shell fire overnight. Reports added that the North is moving artillery close to the border, while the South was reportedly in contact with Washington, declaring the govt is treating the latest escalation with extreme caution. In Europe, after the announcement by Greek PM Tsipras to resign, opposition leader Meimarakis was said to receive mandate to form a govt after meeting with Pres Pavlopoulos. Nonetheless, the euro is up on the greenback as traders continue to express reduced conviction of a Sept Fed liftoff, sending EUR/USD to 3-week high above 1.1280.

***Equities***
US equities / ADRs:
- BRCD: Reports Q3 $0.27 v $0.23e, R$552M v $552Me; +6.0% afterhours
- CRM: Reports Q2 $0.19 v $0.18e, R$1.63B v $1.60Be; +3.1% afterhours
- GPS: Reports Q2 $0.64 v $0.64e, R$3.90 v $3.93Be; SSS -2%; +0.7% afterhours
- INTU: Reports Q4 -$0.05 v -$0.11e, R$696M v $740Me; increases dividend 20% to $0.30 from $0.25; flat afterhours
- HPQ: Reports Q3 $0.88 v $0.85e, R$25.3B v $25.6Be; -0.3% afterhours
- ROST: Reports Q2 $0.63 v $0.62e, R$2.97B v $2.94Be; -9.3% afterhours
- TFM: Reports Q2 $0.36 v $0.40e, R$442M v $463Me; -12.0% afterhours

Notable movers by sector:
- Consumer discretionary: Li & Fung Ltd. 494.HK +2.2% (H1 result); Wynn Macau Ltd 1128.HK -2.3%(H1 result); Chow Tai Fook Jewellery Group 1929.HK -1.3% (close 4 stores); Shenzhen Airport Co 000089.CN -4.2% (H1 result); HTian Ge Interactive Holdings 1980.HK -7.8% (H1 result); XTEP International Holdings 1368.HK -3.1% (H1 result); Car Inc 699.HK -6.1% (H1 result); Fancl Corp 4921.JP -6.5% (July result); Coca-Cola Amatil CCL.AU +2.9% (H1 result)
- Financials: Ping An Insurance 2318.HK -2.3% (H1 result, transaction); SOHO China 410.HK -2.8% (H1 result); Guangzhou R&F Properties 2777.HK -3.5% (H1 result); Jinke Properties Group Co 000656.CN +10.0% (private placement); Western Securities Co 002673.CN +1.5% (H1 result); Shanghai Shimao Co Ltd 600823.CN +6.3% (H1 result); Swire Properties A-shares 1972.HK -2.4% (H1 result); Kerry Properties 683.HK -3.7% (H1 result); CIFI Holdings Group Co 884.HK -6.7% (H1 result, spin-off); Yuexiu Property 123.HK -4.4% (H1 result); Sun Hung Kai & Co 86.HK -3.9% (H1 result); Insurance Australia IAG.AU -4.5% (FY15 result)
- Industrials: Xiamen International Airport Co 600897.CN -5.5% (H1 result);Wai Kee Holdings 610.HK -2.9% (H1 result); Swire Pacific Ltd 19.HK -2.6% (H1 result); Zhong Wang Group 1333.HK -2.0% (H1 result); Qinhuangdao Port 3369.HK -6.0% (H1 result); Tianjin Port Development Holdings 3382.HK -3.0% (H1 result); Mitsubishi Motors 7211.JP -2.8% (to boost op profit)
- Technology: Coolpad Group 2369.HK -6.5% (H1 result); HTC Corp 2498.TW -7.6% (speculation to sell plant); Comba Telecom Systems Holdings 2342.HK -4.2% (H1 result)
- Materials: Luoyang Glass Co 1108.HK +1.6% (approval for reorganization); Chongqing Jianfeng Chemical Co 000950.CN -2.0% (H1 result); Gansu Qilianshan Cement Co 600720.CN -5.8% (H1 result); China West Construction Group Co 002302.CN -7.1% (H1 result); Sims Metal Management SGM.AU +7.7% (FY15 result)
- Healthcare: Guangzhou Baiyunshan Pharmaceutical Holdings Co 874.HK -2.4% (to set up company); Tong Ren Tang Technologies Co 1666.HK -1.8% (H1 result); China Railway Tielong Container Logistics Co 600125.CN -6.6% (H1 result); China Traditional Chinese Medicine Co 570.HK -2.3% (H1 result)
- Telecom: China Mobile Ltd 941.HK +0.7%(H1 result, possible investment in Tietong Telecom, speculation on management change)
- Energy: Offshore Oil Engineering Co 600583.CN -2.1% (H1 result); Sinopec Kantons Holdings 934.HK -4.6% (H1 result); Senex Energy SXY.AU +8.9% (FY16 guidance); Santos Ltd STO.AU +2.0% (H1 result, CEO to resign)
- Utilities: Shenzhen Energy Group Co 000027.CN -0.2% (H1 result); China Power International 2380.HK -4.8% (H1 result); DUET Group DUE.AU -1.9% (FY15 result)

(BN) Asia Stocks Tumble as China PMI Hits Six-Year Low; Gold Climbs


Asia Stocks Tumble as China PMI Hits Six-Year Low; Gold Climbs
2015-08-21 03:40:03.542 GMT


By Adam Haigh and Nick Gentle
(Bloomberg) -- Asian stocks tumbled with U.S. index
futures, extending the worst week for global equities in nine
months, as a gauge of Chinese manufacturing plunged to the
lowest since 2009. Gold extended gains.
Benchmark gauges in Hong Kong, Taiwan and Indonesia headed
for bear markets, dragging down the MSCI Asia Pacific Index by
2.1 percent at 12:36 p.m. in Tokyo. Standard & Poor’s 500 Index
futures dropped 0.3 percent after the gauge fell the most in 18
months. Gold is set for its biggest weekly advance since January
as the selloff in emerging markets spreads. U.S. oil headed for
an eighth straight weekly slide, its longest streak since 1986.
“We’ve been expecting a correction and it looks like we’re
getting one,” said Mark Lister, head of private wealth research
at Craigs Investment Partners Ltd. in Wellington, which manages
about $7.2 billion. “The S&P had held up, now it’s back in
negative territory. The whole world’s looking a little bit sad.
China still looks really worrying on a number of fronts.”
China’s decision to devalue its currency amid slowing
growth and the prospect of higher U.S. interest rates has
spurred a wave of selling across emerging markets and
commodities. The first read on Chinese economic activity in
August added to concern that the slowdown in global growth is
deepening, boosting the appeal of haven assets such as gold and
sovereign bonds.

Oil Drops

The MSCI Asia Pacific Index sank 2.1 percent, with Japan’s
Topix index sliding the most since July 8 and the Kospi gauge in
Seoul set for its worst week since May 2012. The MSCI All-
Country World Index has lost 3.1 percent this week.
Hong Kong’s Hang Seng Index dropped 2.3 percent, taking
declines since an April high beyond 20 percent. Taiwan’s
benchmark gauge dropped 2.4 percent and the Jakarta Composite
Index slid 1.8 percent.
About $2.2 trillion was erased from the value of global
stocks in the first four days of the week. The S&P 500 slipped
out of the 70-point trading range it has been stuck in since
March, falling below 2,040 to as low as 2,035.73 on Thursday. It
closed below its 200-day moving average for the first time since
July 9.
The Federal Reserve’s September rates decision is “only
four weeks away and the world’s looking pretty vulnerable,”
said Stephen Halmarick, Sydney-based head of economic and market
research at Colonial First State Investment Ltd., which oversees
about $150 billion. “If they delay you might see some support
coming through to U.S. markets because then the dollar probably
comes down a bit from where it is now and some of those pressure
points may be relieved, at least in the short term.”

EM Rout

The bloodletting among emerging-market currencies shows no
signs of abating, with a measure of 20 developing economy
currencies set to extend its longest streak of weekly losses
since 2000 after Vietnam and Kazakhstan devalued. The Korean won
weakened 0.7 percent Friday, its fifth drop in six days, while
Malaysia’s ringgit sank 1.3 percent to a new 17-year low.
China’s yuan fell the most in more than a week. The
preliminary Purchasing Managers’ Index from Caixin Media and
Markit Economics was at 47.1 for August. That compared with a
median estimate of 48.2 and the final reading of 47.8 the
previous month. Numbers below 50 indicate contraction.
Redemptions from emerging-market funds picked up in the
week ended Aug. 19, EPFR Global said, citing preliminary data.
Net outflows from bond funds climbed to the highest level since
the first quarter of 2014 and those from equities at a one-month
high. China bond funds had record redemptions
and more than $4 billion was pulled from Asia excluding Japan
stock funds.
West Texas Intermediate crude fell 1.4 percent to $40.76 a
barrel. Copper fell 0.7 percent and is on its way to a seventh
straight weekly loss. The Bloomberg Commodity Index slipped 0.3
percent, taking the week’s loss to 1.5 percent. The gauge has
dropped 13 percent since the end of June and on Wednesday closed
at a 13-year low.
Gold climbed a fifth straight day, while Australian bonds
advanced.




For Related News and Information:
Top Bond Stories: TOP BON <GO>
U.S. Stock Week In Review: TNI USS WIR <GO>
U.S. Stock Greets: TNI USS GREET <GO>
Developed Markets View: DMMV <GO>
World Bond Movers: WBMV <GO>

--With assistance from Emma O’Brien in Wellington.

To contact the reporters on this story:
Adam Haigh in Sydney at +61-2-9777-8635 or
ahaigh1@bloomberg.net;
Nick Gentle in Hong Kong at +852-2977-6545 or
ngentle2@bloomberg.net
To contact the editors responsible for this story:
Michael Patterson at +852-2977-4820 or
mpatterson10@bloomberg.net;
Nick Gentle at +852-2977-6545 or
ngentle2@bloomberg.net
Nick Gentle