Emerging-market stocks advanced for a second day as Ukraine negotiates international aid after military tension with Russia eased. Indonesia’s bonds surged as the cost to insure the nation’s debt against default tumbled.
The MSCI Emerging Markets Index added 0.3 percent to 959.18. Ukraine’s UX Index extended a two-day rally to 10 percent. Indonesia’s 10-year bonds increased for a seventh day as inflation slowed. Brazil’s real led gains among the 31 major currencies tracked by Bloomberg, jumping to the highest level since December. The Shanghai Composite Index retreated amid concern China faces its first onshore corporate bond default.
The European Union promised 1.6 billion euros ($2.2 billion) in aid to help the Ukrainian government avert a default, while U.S. lawmakers are negotiating a package, including $1 billion in loan guarantees. Russia’s President Vladimir Putin ordered yesterday the end to military exercises in Ukraine and said he’d only send soldiers in an extreme case.
“The market rallied on indications that this is a short-term issue, and it’s unlikely to escalate further,” Timothy Ghriskey, chief investment officer at New York-based Solaris Group LLC, which manages about $1.5 billion in assets, said by phone. “For now it’s calmer, but I don’t think anybody can declare victory. It’s still an evolving situation.”
The iShares MSCI Emerging Markets Index exchange-traded fund rose 0.1 percent to $39.47. The premium investors demand to own emerging-market debt over U.S. Treasuries dropped 0.03 percentage point to 315 basis points, according to JPMorgan Chase & Co.
Ukraine’s UX Index of equities added 0.7 percent after rallying 9.5 percent yesterday. Russian government bonds and the ruble advanced as central bank Chairman Elvira Nabiullina said she has the tools to ensure financial stability. Ciech SA climbed in Warsaw after billionaire Jan Kulczyk offered to buy Poland’s largest maker of soda for glass production.
The yield on the 8.375 percent Indonesia’s notes due March 2024 slid seven basis points, or 0.07 percentage point, to 8.04 percent as of 4:12 p.m. in Jakarta, according to the Inter Dealer Market Association. That was the lowest since Nov. 8. Five-year credit-default swaps on Indonesian debt fell 10 basis points to 183 yesterday, the least since June 4, 2013, according to data provider CMA.
China’s stocks fell the most in a week amid concern the country faces its first onshore corporate bond default this week. Property shares slid as the government pledged to boost supply and clamp down on speculation. Shanghai Chaori Solar Energy Science & Technology Co. said it may not be able to make an 89.8 million yuan ($14.6 million) interest payment in full by the March 7 deadline.