Emerging stocks posted their longest stretch of monthly gains since 2005 as speculation that central banks will support economic growth outweighed concern the conflict between Ukraine and Russia is worsening.
Brazil’s Ibovespa extended its August surge to 9.8 percent on bets President Dilma Rousseff will lose her re-election bid amid faltering economic growth. Egyptian stocks led monthly increases among markets in developing Europe and the Arab world with a 6.9 percent advance. The S&P BSE Sensex posted the longest monthly rally since 2007 yesterday. The ruble fell for a fourth day, depreciating for a second month amid U.S. and European Union against Russia.
The MSCI Emerging Markets Index added 0.1 percent to 1,087.88 in New York today. The developing-nation measure has risen 2.1 percent in August, its seventh month of advances. The value of global equities reached a record $66 trillion this week on speculation markets worldwide can withstand crises in Ukraine, the Gaza Strip and Iraq. The U.S. and the EU are threatening Russia with further sanctions, even as the EU began talks to allow natural gas flows to resume.
“The geopolitical tensions right now have very little impact as they are somewhat regional in scope,” Christopher Palmer, who oversees about $2.5 billion as the London-based director of global emerging markets at Henderson Global Investors Ltd., said in an e-mailed reply. “EM continues to trade higher on reform themes in India, China, Mexico and Indonesia as well as the excitement surrounding the Brazilian Presidential election.”
The emerging-markets gauge has risen 8.5 percent this year and trades at 11.3 times projected 12-month earnings, near the most expensive level since 2011, data compiled by Bloomberg show. The MSCI World Index of developed nations has gained 5.3 percent and is valued at a multiple of 15.
Seven out of 10 industry groups in the developing-nation gauge rose today, paced by utility and energy shares. Cnooc Ltd. added 2.9 percent in Hong Kong after first-half profit at China’s biggest offshore energy producer beat estimates.
The Ibovespa (IBOV) added 1.7 percent, extending its best month since January 2012. Lender Itau Unibanco Holding SA rose 2.3 percent, the highest level since its 1994 debut, on speculation that a change in government would reduce intervention in industries including banking.
Egyptian stocks yesterday posted their second monthly advance in a row. The gauge has increased 11 percent following former army chief Abdel-Fattah El-Sisi’s election victory in late May. El-Sisi, who ousted former president Mohamed Mursi in July last year, has made restoring order in the politically unstable country one of his top objectives.
The WIG30 Index slipped 0.1 percent today, paring its August gain to 3.7 percent. Data today showed Poland’s second-quarter gross domestic product expanded 3.3 percent from a year earlier, topping a preliminary estimate of 3.2 percent reported on Aug. 14.
Hungary’s BUX Index increased 0.7 percent, taking its monthly gain to 1.5 percent. The nation’s economy will expand 2.9 percent in 2014, according to the latest Bloomberg News survey of analysts conducted from Aug. 22 to Aug. 27.
The Micex Index dropped 1.6 percent to the lowest level in two weeks, extending its decline since Russia annexed Ukraine’s Crimea in February to 3.1 percent. The ruble weakened to a record as concern deepened Russia may face more sanctions and JPMorgan Chase & Co. said the country’s equities could face a “Lehman-style” shock amid a worsening crisis in Ukraine.
The EU began talks in Moscow aimed at a temporary deal with Ukraine to allow natural-gas flows to resume, while a British government official said today the U.K. will press EU leaders to consider blocking Russian access to the SWIFT banking transaction system under an expansion of penalties over the conflict in Ukraine.
More than 1,000 Russian troops are operating inside Ukraine, the North Atlantic Treaty Organization said yesterday. Ukrainian stocks slumped 11 percent in August, halting a four-month long rally.
The Hang Seng China Enterprises Index of mainland companies gained 0.3 percent today, trimming the first monthly loss in four. The Shanghai Composite Index rose 1 percent, extending its increase in August to 0.7 percent.
The Sensex (SENSEX) advanced 2.9 percent in August after closing at a record yesterday. India’s markets are shut for a holiday today. Turkey’s Borsa Istanbul 100 Index (XU100), which fell 0.6 percent today, slipped 2.2 percent this month.
The premium investors demand to own developing-country debt over U.S. Treasuries narrowed two basis points to 279, according to JPMorgan Chase & Co. indexes.
To contact the editors responsible for this story: Daliah Merzaban at firstname.lastname@example.org Zahra Hankir, Stephen Kirkland