East Europe Leads Stock Gains Since Post-Lehman Low (Update4)

March 9 (Bloomberg) -- East European and Central Asian stocks led gains in the year since global equities bottomed out following the bankruptcy of Lehman Brothers Holdings Inc.

Ukraine’s PFTS Index surged almost fourfold since March 9 last year, the biggest gain among 93 stock measures worldwide, as governments committed about $12 trillion to revive economies hit hardest by the global recession. Shares in Russia, the world’s largest energy supplier, Kazakhstan and Hungary more than doubled in the past year as a rebound in economic growth and interest-rate cuts from the U.S. to China boosted oil and metals prices.

Stocks plunged worldwide after Lehman’s collapse in September 2008 froze credit markets and caused global trade to plummet. The MSCI AC World Index of shares in developed and emerging nations, which sank 60 percent from its October 2007 peak to its trough last year, has since rallied 74 percent.

“Investor panic led to a sharp fall in many of those markets,” said Shane Oliver, the Sydney-based head of investment strategy at AMP Capital Investors, which oversees about $90 billion. “Those markets that have fallen the most have been able to rebound the strongest as the global financial crisis eases.”

The PFTS index jumped 293 percent in the past year as a $16.4 billion bailout agreement with the International Monetary Fund helped Ukraine repay creditors following a plunge in demand for exports such as steel and a funding crisis in the banking industry.

Russia, Romania

Russia’s Micex Index has rallied 105 percent during the past year, while Kazakhstan’s KASE index tripled following rebounds in oil and metals prices. Romania’s Bucharest Exchange Trading Index surged 180 percent after a new government got the IMF to unfreeze a $27 billion bailout. The Standard & Poor’s 500 Index of U.S. stocks advanced 68 percent in the past 12 months.

“We may still get decent returns there, but you have to be very selective and careful on where to invest,” said Aberdeen Asset Management Co.’s Mike Turner, referring to stock markets in eastern Europe. Turner helps oversee more than $230 billion as Aberdeen’s head of global strategy and asset allocation.

Developing-nation economies will expand 6 percent in 2010, compared with 2.1 percent for advanced nations, according to estimates from the IMF.

Today’s Markets

The PFTS index climbed 3.8 percent today, while the KASE index added 0.1 percent. The Micex index slipped 0.1 percent and the BET gauge lost 0.7 percent. The MSCI AC World Index slipped as much as 0.5 percent after companies from European Aeronautic, Defence & Space Co. to Antofagasta Plc posted results that disappointed investors.

Sri Lanka’s Colombo All-Share Index surged 134 percent in the past year with the end of the island’s civil war. Argentina’s Merval Index and Turkey’s ISE National 100 Index were also among the world’s top 10 gainers.

Hong Kong-listed Skyworth Digital Holdings Ltd., which sells color televisions in China, jumped more than 12-fold as China sought to boost consumer spending by giving rebates for household appliance purchases by residents in rural areas. Skyworth, the best gainer in the MSCI gauge of 22 developing countries during the past year, added 7.7 percent today.

The Australian dollar and the South African rand led gains in global currencies against the U.S. dollar and the euro during the past year, strengthening more than 30 percent as the rebound in global economic growth lifted demand for the countries’ mining exports.

East European currencies also rallied, with the Polish zloty gaining 22 percent against the euro and Hungary’s forint climbing 16 percent. The region led gains among developing- nation bonds, returning 44 percent over the past year, according to JPMorgan Chase & Co.’s EMBI Global Index.

The Australian dollar added 0.2 percent against the U.S. currency today, while the rand slipped 0.1 percent. The zloty was little changed trading near a 15-month high against the euro and the forint weakened 0.4 percent versus Europe’s common currency.

--Chua Kong Ho, Michael Patterson. With assistance from Anuchit Nguyen in Bangkok. Editors: Reinie Booysen, Stephen Kirkland

To contact the Bloomberg News staff on this story: Chua Kong Ho in Shanghai at Kchua6@bloomberg.net