Emerging ETF Rises as Sanctions Against Russia Seen Muted

The iShares MSCI Emerging Markets Index rebounded from the lowest level in a month on speculation that new sanctions against Russia won’t hurt the economy.

The exchange-traded fund rose 0.5 percent to $41.02 at 4 p.m. in New York. The MSCI Emerging Markets Index fell less than 0.1 percent to 993.12. The Micex Index climbed 1.5 percent in Moscow while the ruble rallied for the first time in three days. Brazil’s real led gains in major currencies on speculation a poll will show reduced support for President Dilma Rousseff. China’s money-market rate jumped to a three-week high on signals that a large-scale loosening of monetary policy is unlikely.

The Obama administration imposed sanctions on seven Russian officials and 17 companies linked to Russian President Vladimir Putin’s inner circle involved in banking, energy and infrastructure. The sanctions, announced by the White House today, are being imposed in conjunction with the European Union, which added 15 names to its list. The U.S. warned it’s prepared to levy more sanctions affecting the broader economy.

“The efforts by the allied community are somewhat weak,” Keith Wirtz, the Minneapolis-based chief executive officer at Walrus Partners LLC, said by phone. “The market has looked past a lot of the political rhetoric and it only cues off of anything that looks military by nature. And we’re not seeing signs of military actions or interventions at this point.”

The U.S. sanctions didn’t include OAO Gazprombank or state-development bank Vnesheconombank as some investors speculated. The list includes Igor Sechin, chief executive officer of OAO Rosneft (ROSN), Russia’s biggest oil company, and Sergey Chemezov, head of Russian Technologies as well as banks including InvestCapitalBank and SMP Bank.

Sberbank Surges

The Micex Index snapped five days of declines in Moscow while the ruble trimmed this year’s slide 8.5 percent. OAO Sberbank, Russia’s biggest lender, surged 5 percent.

Brazil’s real gained 0.9 percent, the most among 31 major currencies tracked by Bloomberg. The poll commissioned by the National Transport Confederation is due tomorrow. Rousseff’s personal approval rating dropped to 55 percent in February from 58.8 percent in November, according to an earlier survey.

China’s stocks fell, sending the benchmark index to its biggest loss in seven weeks, after the nation’s biggest life insurer reported a drop in profit and concern grew that new share sales will divert funds. The seven-day repurchase rate, a gauge of interbank funding availability, jumped 51 basis points, or 0.51 percentage point, to 4.02 percent as of 4:20 p.m. in Shanghai, according to a weighted average by the National Interbank Funding Center.

The Politburo, the ruling Communist Party’s highest decision-making body, decided at a meeting April 25 to keep monetary and fiscal policies, even as the economy faces difficulties, the official Xinhua News Agency reported that day.

To contact the reporters on this story: Julia Leite in New York at jleite3@bloomberg.net; Alexandria Baca in New York at abaca3@bloomberg.net; Natasha Doff in London at ndoff@bloomberg.net

To contact the editors responsible for this story: Nikolaj Gammeltoft at ngammeltoft@bloomberg.net Rita Nazareth, Stephen Kirkland

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