Emerging-Market Equities Post Weekly Advance as Brazil Rallies

Emerging-market stocks posted a weekly gain as oil producer Petroleo Brasileiro SA led a rally in Brazil on speculation a new president will revive growth in Latin America’s largest economy, offsetting declines in Russia.

The Ibovespa surged the most among the world’s biggest equity benchmarks as a poll showed President Dilma Rousseff’s lead narrowing in the October election. Chinese stocks rallied amid speculation more cities will loosen property curbs as home prices slump. The S&P BSE Sensex Index increased for a fourth day as Indian software stocks advanced. The Micex Index (INDEXCF) slid to a seven-week low in Moscow, with natural-gas producer OAO Gazprom posting its longest losing streak on record.

The iShares MSCI Emerging Markets ETF increased 1.6 percent to $44.16, pushing its gain this week to 0.6 percent. The second-biggest exchange-traded fund that holds developing-country stocks sank 1.9 percent yesterday amid concern the shooting down of a Malaysian jet in Ukraine would escalate tensions in eastern Europe.

“The news did not get worse, which is good news,” Paul Zemsky, the New York-based head of multi-asset strategies at Voya Investment Management LLC, which oversees $213 billion, said by phone. “The combination of no additional bad news overall in the world and potentially a better outcome in the election has caused Brazil to jump.”

The MSCI Emerging Markets Index gained 0.1 percent to 1,063.26 today, extending its weekly advance to 0.4 percent. Brazil’s real rallied 1.4 percent, the most among 24 developing-nation currencies tracked by Bloomberg.

Brazilian Stocks

Petrobras, as state-run Petroleo Brasileiro is also known, advanced 4.9 percent, contributing the most to the Ibovespa’s 2.5 percent gain. Rousseff would win 44 percent of the vote in a second round against candidate Aecio Neves, down from 46 percent in in a previous survey, according to results published last night in newspaper Folha de Sao Paulo’s online edition.

The Sensex advanced 0.3 percent. The Shanghai Composite Index (SHCOMP) added 0.2 percent, halting a two-day loss, as China Vanke Co. and Poly Real Estate Group Co. surged at least 3.2 percent. South Africa’s benchmark equity gauge lost 0.2 percent, while indexes in Poland, Hungary and the Czech Republic fell at least 0.4 percent.

Malaysian Airline System Bhd (MAS) retreated 11 percent, the most since May 19. The disaster in Ukraine comes four months after the disappearance of Flight 370, which contributed to the carrier’s biggest loss since 2011.

Micex Drop

The Boeing Co. 777 crashed en route to Kuala Lumpur from Amsterdam in the main battleground of Ukraine’s civil war. Pro-Russian separatists denied involvement in the incident, while President Vladimir Putin called for peace negotiations during a meeting near Moscow.

The Micex slid 1.3 percent, pushing its five-day decline to 5.2 percent. Gazprom, Russia’s state-run natural gas exporter, retreated 0.5 percent, decreasing for an eighth day.

Russian stocks fell yesterday after the U.S. imposed new sanctions on companies to punish Putin for failing to end support for the insurgency.

Malaysia Airports Holdings Bhd. (MAHB) tumbled 4.9 percent, the most since September 2011. Cathay Pacific Airways Ltd. (293), the biggest international carrier in Asia, declined 0.6 percent in Hong Kong.

The developing-nation gauge has risen 6.1 percent this year and trades at 11.1 times projected 12-month earnings, according to data compiled by Bloomberg. The MSCI World Index has added 5 percent and is valued at a multiple of 15.1.

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

To contact the editors responsible for this story: Michael Patterson at mpatterson10@bloomberg.net Richard Richtmyer, Marie-France Han

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