Emerging-Market Stocks Advance on Ukraine Deal as Ruble Rallies

Apr 17, 2014 5:16 pm ET

April 17 (Bloomberg) -- Emerging-market stocks rose for a second day after diplomatic leaders reached a deal aimed at defusing the crisis in Ukraine. Russia’s ruble posted the biggest advance among the world’s major currencies.

The MSCI Emerging Markets Index added 0.7 percent to 1,009.22. The Micex Index of equities extended a two-day advance to 1.4 percent in Moscow, the ruble jumped the most among 31 global currencies tracked by Bloomberg and Ukraine’s hryvnia posted the longest rally since August. India’s 10-year sovereign bonds climbed the most in four months after the government auctioned debt at lower yields than investors estimated.

U.S. Secretary of State John Kerry and Catherine Ashton, the European Union’s foreign-policy chief, gathered in Geneva today with foreign ministers from Russia and Ukraine for more than six hours. Their agreement called for all illegal armed groups in Ukraine to be disarmed, all seized buildings to be returned to their legitimate owners and occupied public places to be vacated. Kerry said that unless the Russian government starts acting on the accord, sanctions will follow.

“Headlines from Ukraine are going to continue to bring volatility, but I don’t expect Ukraine to become a market event unless there is true Western military action,” James Paulsen, the Minneapolis-based chief investment strategist at Wells Capital Management, which oversees about $360 billion in assets, said by phone. “If we stick with economic sanctions, I don’t think it’s a big event. It fades away.”

ETF Gains

The iShares MSCI Emerging Markets Index ETF rose 0.9 percent to $42.01. The premium investors demand to own emerging- market debt over U.S. Treasuries fell 0.05 percentage point to 292 basis points, according to JPMorgan Chase & Co.

The Micex advanced for a second day, led by OAO Sberbank, while the ruble trimmed this year’s slide against the dollar to 7.7 percent. The hryvnia rallied 1.3 percent, extending its appreciation this week to 12 percent.

India’s benchmark stock index rallied for the first time in four days. Tata Motors Ltd., the owner of Jaguar Land Rover, soared the most in five months. ICICI Bank Ltd., the country’s second-biggest lender, advanced to its highest level since 2010. The yield on India’s 8.83 percent notes due November 2023 slid 12 basis points, or 0.12 percentage point, to 8.85 percent in Mumbai, the biggest drop since Dec. 18, prices from the central bank’s trading system show.

Chinese stocks declined as energy producers and financial shares dropped, overshadowing an advance by technology companies. The yuan advanced the most in more than a week after the government said it will lower reserve-requirement ratios at some rural banks, fueling speculation authorities will act to stabilize growth.

Brazil’s Ibovespa advanced for a second straight day as steelmaker Gerdau SA led a rally by commodity producers after economic data indicating growth in the U.S. pushed oil and metal prices higher.