Emerging-Markets ETF Gains as Morgan Stanley Recommends Russia

The iShares Emerging Markets exchange-traded fund rose for a second day as the Micex (INDEXCF) Index rallied after Morgan Stanley recommended buying Russian stocks, outweighing a drop in Chinese shares.

The ETF increased 0.3 percent to 43.14 in New York, pushing its two-day gain to 0.9 percent. The MSCI Emerging Markets Index added less than 0.1 percent to 1,038.64. Natural-gas producer OAO Gazprom led a 1.5 percent advance in the Micex. Infosys Ltd. (INFO) slumped to a 10-month low in Mumbai amid executive resignations.

Morgan Stanley reiterated a buy recommendation on Russian equities, saying in an e-mailed research report that Petro Poroshenko’s election as president of Ukraine will help ease tensions between the two countries, which will probably benefit stocks. The Shanghai Composite Index (SHCOMP) fell 0.5 percent as Chinese Premier Li Keqiang said there is instability in the global recovery.

“Russia is gaining because there were post-weekend worries about the situation in eastern Ukraine, but it doesn’t look as though this will escalate to a surge in tension” Simon Quijano-Evans, a London-based analyst at Commerzbank AG, said by e-mail. “In China, concerns on the general growth story have been re-emerging recently. There have been numerous comments from officials in the past week or so that indicate more needs to be done at all official levels to buoy the macro story.”

Indian Stocks

The developing-nation gauge has gained 3.6 percent this year and trades at 10.8 times projected 12-month earnings, data compiled by Bloomberg show. The MSCI World Index has risen 3.1 percent in 2014, and is valued at a multiple of 15.

Gazprom rallied 2.1 percent in Moscow, ending a two-day decline. The ruble depreciated 0.3 percent to 34.6568 per dollar.

Infosys sank 6.6 percent. Co-president B.G. Srinivas has resigned, the company, which is searching for a new chief executive officer, said yesterday. The drop pushed the S&P BSE Sensex Index to a 1.3 percent decline, the steepest since Feb. 3.

The Ibovespa fell 0.8 percent. JBS SA, the world’s largest meat producer, tumbled 4.2 percent.

The Shanghai Composite sank from a two-week high, with more than four shares sliding for each that rose. The Hang Seng China Enterprises Index declined 0.1 percent in Hong Kong. Premier Li said there were still uncertainties and unstable factors in the global recovery, China Central Television reported. The nation is scheduled to release reports on factory activity and services next week.

Philippine Growth

Dubai’s DFM General Index (DFMGI) jumped 5 percent, rebounding from yesterday’s 3.3 percent slide. The gauge has more than doubled in the past 12 months on bets that an upgrade to emerging-markets status in June by index provider MSCI Inc. will lure investors managing about $8 trillion in assets.

Abu Dhabi’s ADX General Index surged 5.5 percent, the steepest increase since 2009, after tumbling 2.4 percent yesterday. Thailand’s SET Index rose 0.4 percent, its third day of gains. Turkey’s stock index added 1.7 percent to a seven-month high.

The Philippine Stock Exchange Index fell 1.6 percent. Gross domestic product increased 5.7 percent in the three months through March from a year earlier, the Philippine Statistics Authority said in Manila today.

The premium investors demand to own emerging-market debt over U.S. Treasuries fell 0.07 percentage point to 272 basis points, according to JPMorgan Chase & Co. indexes.

To contact the reporters on this story: Natasha Doff in London at ndoff@bloomberg.net; Anuchit Nguyen in Bangkok at anguyen@bloomberg.net

To contact the editors responsible for this story: Michael Patterson at mpatterson10@bloomberg.net; Stephen Kirkland at skirkland@bloomberg.net Marie-France Han

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