Emerging-market stocks fell, snapping a nine-day advance, amid concern that the crisis in Ukraine will escalate after NATO leaders warned Russia has troops on a high state of readiness on its neighbor’s border.
The MSCI Emerging Markets Index dropped 0.5 percent to 1,000.17. The Micex Index declined for a second day, led by OAO Sberbank, while the ruble extended this year’s slump to 7.6 percent. Brazil’s Ibovespa retreated from a four-month high as Cyrela Brazil Realty SA led Brazilian homebuilders lower. Turkish bonds ended the longest streak of gains in 11 months amid speculation the central bank will raise interest rates.
Equities in developing nations fell after reaching the highest valuation level in three months. NATO leaders warned yesterday that they haven’t seen signs of a significant reduction in Russian military forces along Ukraine’s border and any incursion would be a “historic mistake.” U.S. lawmakers approved on April 1 a range of sanctions against Russian officials deemed responsible for corruption and violence.
“Ukraine just drives home a story that’s been developing over time,” Patrick Chovanec, the New York-based chief strategist at Silvercrest Asset Management Group LLC, said by phone. His firm manages $14.1 billion in assets. “People are afraid things are going to fall completely off the rails, and when they don’t, they jump back in. Then they see there are some problems and they have second thoughts.”
Investors put $464.5 million in emerging-market exchange-traded funds yesterday, almost double the average daily flow for the past four weeks, according to data compiled by Bloomberg. About $2.9 billion has been added in the last five trading days, cutting outflows this year to $10.6 billion.
The iShares MSCI Emerging Markets Index ETF fell 0.4 percent to $41.41. The premium investors demand to own emerging-market debt over U.S. Treasuries was unchanged at 289 basis points, according to JPMorgan Chase & Co.
Russia’s Micex Index extended its slump this year to 9.2 percent as Sberbank sank, while the ruble weakened for a second day. Ukrainian Eurobonds fell for the first time in almost two weeks and the hryvnia slumped.
Turkey’s two-year note yields rose 20 basis points to 10.72 percent at the 5 p.m. close in Istanbul, the first gain in eight days. The lira weakened.
Brazilian shares retreated amid speculation recent gains might have been excessive given the outlook for slow economic growth. Cyrela sank 4.9 percent. The real slid as the central bank signaled that it was ready to end the world’s longest stretch of increases in borrowing costs.
China’s stocks fell for the first time in three days as banks and property developers slumped, overshadowing government measures to support economic growth. Poly Real Estate Group Co. slid 1.6 percent, while China Vanke Co. declined 2.3 percent after the China Securities Journal called for maintaining restrictions on home purchases.