Tech stocks, China drag down emerging markets as rebound stalls

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Asia,Pacific Rim,Bonds

Emerging-market stocks headed for the biggest drop since the Aug. 5 global slump as China’s economic woes and approaching risks including the U.S. Federal Reserve’s Jackson Hole conference and earnings from Nvidia Corp. left investors cautious.

Jimmy Lee, chief executive officer at Wealth Consulting Group, joins BNN Bloomberg to share his outlook for the markets.

While EM stocks are heading for a monthly gain, investors remain on the edge as U.S.-market gyrations and the November presidential election weigh on sentiment. An interest-rate cut by the Fed next month is priced in, but the focus is turning to the underlying economic rationale for the easing. If rate cuts are necessitated by a sharp deceleration in U.S. growth, they could still leave investors unwilling to take on emerging-market risk.

JD.com Inc. plunged 8.7 per cent in Hong Kong as Walmart Inc. sought to dispose of its stake in the Chinese e-commerce firm. That triggered a selloff across Chinese stocks as the move pointed to concerns over the country’s consumption outlook as well as waning confidence in its equity market. Despite the recent rebound, stocks could continue to be volatile at least until the next catalyst for Asian technology stocks in the form of Nvidia’s results on Aug. 29, he said. For China, traders would wait for data confirming that economic growth has bottomed out before sending stocks on a “structural rebound.”

 

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