Emerging Market Stocks Advance as Ibovespa Gains; Micex Rebounds

Emerging-market stocks rose as Brazil’s Ibovespa gained on speculation President Dilma Rousseff will be voted out of office. Russian shares ended a two-day drop after Foreign Minister Sergei Lavrov called for talks to resolve the Ukraine crisis.

The MSCI Emerging Markets Index rose 0.3 percent to 1,003.93. The Ibovespa gained 0.6 percent as oil producer Petroleo Brasileiro SA led gains in state-controlled companies. The Micex Index (INDEXCF) added 1.6 percent in Moscow after Lavrov said the Geneva accord designed to end a crisis with Ukraine hadn’t failed and urged all Ukrainians to discuss the country’s future.

“Brazilian equities are being boosted by growing chances that Dilma won’t be reelected,” Joao Pedro Brugger, who helps oversee 520 million reais ($233.2 million) as a portfolio manager at Leme Investimentos, said in a phone interview from Florianopolis, Brazil. “Investors are really fed up with this administration’s policies. People are getting more optimistic as the odds for a change increase.”

Brazil’s real strengthened 0.7 percent to 2.2294 per dollar. The ruble appreciated to the highest since April 4 against the dollar. Taiwan Semiconductor Manufacturing Co. increased for the first time in a week after JPMorgan Asset Management said hardware stocks in Taiwan and Korea offer good buying opportunities.

OAO Gazprom led Russian stocks higher as the country’s benchmark index ended a two-day decline. Stocks on the Micex fell 4.6 percent in April.

Russian Recovery

“The upturn in Moscow might be a bit of a snap back from the selloff we saw in the second half of April,” Neil Shearing, chief emerging-markets economist at Capital Economics Ltd., said by phone from London. There is also an “easing of fears about China and growing signs from the Federal Reserve that the withdrawing of stimulus is going to be very gradual,” he said.

The Fed reduced monthly asset buying to $45 billion on April 30 with the fourth straight $10 billion cut, and policy makers said further reductions in “measured steps” are likely. Markets in South Korea and Hong Kong are shut for holidays, while the Shanghai Stock Exchange Composite Index increased for the fourth day with a gain of less than 0.1 percent.

The developing-nation gauge is little changed so far this year and trades at 10.5 times projected 12-month earnings, data compiled by Bloomberg show. The MSCI World Index has risen 1.2 percent in the period, and is valued at a multiple of 14.2.

Ukrainian Stocks

Shares on Russia’s index are valued at 0.65 times net assets, or book value, after last week dropping to the cheapest level since 2009, data compiled by Bloomberg show. The ruble increased 1 percent versus the dollar. Ukraine’s UX Index rallied 1.4 percent, while the hryvnia depreciated for the second day.

Hungary’s BUX Index added 1.7 percent. The nation’s central bank will cut its benchmark rate by a further 25 basis points in the “coming months” on “exceptionally low inflation” relative to the three percent target, Bank of America Merrill Lynch economist Raffaella Tenconi said in an e-mailed report.

The country’s retail sales accelerated to 8.3 percent in March, compared with 6.7 percent in the year-earlier period, data today showed.

Dubai, Turkey

Stocks in Dubai, the world’s best-performing index whose stocks will be added to the developing-nation measure as of the close of trading on May 29, increased 0.8 percent. Investment Corp. of Dubai, the emirate’s main state-owned holding company, may sell a dollar bond after picking banks including Citigroup Inc. and HSBC Holdings Plc, according to a person familiar with the matter, who asked not to be identified because they’re not authorized to speak about it.

Turkey’s benchmark index gained 0.6 percent. The lira strengthened 0.5 percent against the dollar, rallying for a ninth day.

The European Union will urge Turkey to reduce its current-account deficit and focus its monetary policy on inflation prospects, according to draft conclusions for today’s meeting of finance ministers from the 28-nation bloc and the four EU candidate countries.

The premium investors demand to own emerging-market debt over U.S. Treasuries fell 0.03 percentage point to 290 basis points, according to JPMorgan Chase & Co. indexes.

To contact the reporters on this story: Ney Hayashi in Sao Paulo at ncruz4@bloomberg.net; Julia Leite in New York at jleite3@bloomberg.net

To contact the editors responsible for this story: Daliah Merzaban at dmerzaban@bloomberg.net Nikolaj Gammeltoft, Richard Richtmyer

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