BackEmerging market stocks rebound as Micex rises most in 4 years
The MSCI Emerging Markets Index rose 0.3% to 953.80 in London, following Monday's 1.6% slump
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Bangkok/London: Emerging market stocks rebounded and Russia’s Micex Index rallied the most since May 2010 as the prospects for all-out war in Ukraine receded. The ruble climbed from a record low.
The MSCI Emerging Markets Index rose 0.3% to 953.80 at 10:49 am in London, following Monday’s 1.6% slump. The Micex Index jumped 4.8% after plunging 11%, the most since November 2008. The ruble strengthened 0.6% against the central bank’s basket of dollars and euros after closing at an all-time low 42.6570. Turkey’s lira and the Polish zloty both gained at least 0.7%.
President Vladimir Putin oversaw the end of military drills in western Russia on Monday and ordered soldiers to return to their bases, the Russian defence ministry said. US secretary of state John Kerry is on the way to Kiev after Russia told the United Nations its intervention in the Crimea region is a legitimate response to threats from extremists.
“Putin ordered the troops that did the exercise at the border to Ukraine back to base, which looks like a signal of de-escalation and markets reacted accordingly," Michael Ganske, head of emerging markets at Rogge Global Partners Plc in London, said by email. “The Ukraine situation will stay the focus for investors."
China’s Shanghai Composite Index snapped a four-day rally before the start of an annual policy-setting meeting on Wednesday.
Clear Violation
The MSCI emerging-market gauge has fallen 5% this year and trades at 10.3 times projected 12-month earnings, data compiled by Bloomberg show. The MSCI World Index is little changed in 2014, and is valued at 14.8 times.
Kerry’s trip to Kiev comes after the leaders of the Group of Seven (G-7) nations condemned Russia’s actions as a clear violation of Ukraine’s territorial integrity. Russia denied a report on Monday it had given Ukrainian navy ships a deadline to capitulate.
Russia’s defence ministry held the drills, involving about 150,000 troops, across several regions near the border with Ukraine between 26 February and 3 March. The soldiers are expected back in their bases by 7 March, according to the ministry’s website. The Kremlin still has 16,000 troops deployed in Ukraine’s Crimea region.
Russia cancelled a bond auction scheduled for Wednesday after the country’s intervention in Crimea drove bond yields to the highest since 2012 this week. The yield on its ruble debt due February 2027 declined five basis points to 8.83% in Moscow after surging 52 basis points on Monday.
Ruble Rebound
United Co. Rusal, an aluminum producer, jumped 13%, recouping all of Monday’s losses. OAO Mechel climbed 9.3% after a 23% slump on Monday. OAO Sberbank climbed 7.9%, while shares in OAO Gazprom, the world’s largest natural-gas exporter, rose 6.1%.
The ruble gained 0.7% to 36.2575 per dollar after Monday’s 1.7% drop. The zloty climbed 0.7% to 4.1929 per euro, while the lira added 0.7% to 2.2161 versus the dollar. The BUX Index in Budapest jumped 2.1% and the Borsa Istanbul 100 Index surged 2%.
Energy stocks leapt 1.9%, the biggest gain in almost a month, as five out of 10 industry groups in the developing nation gauge advanced. Information technology stocks dropped the most after reaching a record on 28 February.
Abu Dhabi’s gauge rose 1.3%, leading stock indexes in the Middle East higher. Saudi Arabia’s Tadawul All Share Index added 1.1% while Dubai’s measure rose 0.4%.
China Congress
Chinese automaker Geely Automobile Holdings Ltd., whose export markets include Russia and Ukraine, sank 2.1% in Hong Kong. Tension over Ukraine and higher interest rates in Russia may hurt car sales, Paul Gong, a Hong Kong-based analyst at Citigroup Inc., wrote in a note.
The Shanghai Composite Index slipped 0.2%, halting its longest stretch of gains in three weeks. China Citic Bank Corp. dropped 2% to drag down smaller lenders as money-market rates jumped the most in six weeks.
Investors will be watching the meeting of the National People’s Congress for clues to the next steps in plans to fix local-government finances, charge market prices for natural resources, rein in shadow-banking risks, free up deposit rates and open up state businesses to private investment.
China Vanke Co., the country’s biggest developer by market value, surged 10% in Shenzhen after Hong Kong’s regulator approved the company’s plan to shift foreign-currency shares to the city. The Hang Seng China Enterprises Index rose 0.3%, snapping a two-day loss.
South Korea’s won fell 0.3%, while the Philippine peso lost 0.1%. The S&P BSE Sensex added 1.1%, the most since 15 January. South Korea’s Kospi index fell for a second day, slipping 0.5%. Gauges in Taiwan, Malaysia and the Philippines lost at least 0.2%. Bloomberg
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