Emerging Stocks Rise as Ukraine Concerns Ease While China Drops
Emerging-market stocks rose for a second day as concerns eased that the standoff in Ukraine will escalate into a war. Chinese shares fell after a solar company warned it is unable to meet a bond-interest repayment.
The MSCI Emerging Markets Index gained 0.5 percent to 960.51 as of 1:36 p.m. in Hong Kong. Samsung Electronics Co. and Tencent Holdings Ltd. (700) led a rally for developing-nation technology companies. South Korea’s won strengthened for the first time in three days versus the dollar, while Indonesia’s rupiah climbed 0.2 percent. The Shanghai Composite Index fell the most in a week.
Russian President Vladimir Putin said yesterday he saw no immediate need to invade Ukraine. 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. China retained a target for 7.5 percent growth in 2014 as the national legislature began its annual meeting.
“All markets saw a bit of an initial bounce, though the concern over Ukraine has not gone away,” said Andrew Sullivan, director of sales trading at Kim Eng Securities Hong Kong Ltd. “People want a clearer picture of what is really going on.”
The developing-nation index has declined 4.2 percent this year and trades at 10.4 times projected 12-month earnings. The MSCI World Index of developed countries has gained 1.1 percent this year and is valued at 14.9 times, data compiled by Bloomberg show.
U.S. Secretary of State John Kerry arrived today in Kiev promising to guarantee $1 billion in loans to Ukraine’s embattled leaders as President Barack Obama challenged Putin’s assertion of a right to intervene militarily.
Putin said yesterday that he saw no immediate need to invade eastern Ukraine, while maintaining that a request from ousted President Viktor Yanukovych would justify doing so.
Eight out of 10 industry groups advanced, as a gauge of technology companies jumped 1.8 percent, headed for a record close. Samsung climbed 1.6 percent in Seoul, while Tencent, Asia’s largest Internet company, added 2.5 percent, poised to close at a record high.
The Philippine Stock Exchange Index gained 1.2 percent, set to close at a four-month high. Equity gauges in South Korea, Indonesia and Taiwan climbed at least 1 percent. The won and rupiah added 0.2 percent and Thailand’s baht rose 0.1 percent.
The S&P BSE Sensex fell 0.1 percent. India will start voting next month to determine if Prime Minister Manmohan Singh’s ruling party can fight off a resurgent opposition and extend its decade-long rule of the world’s most-populous democracy.
The Shanghai Composite Index slipped 0.2 percent, its second day of declines, amid concern the country faces its first onshore corporate bond default this week.
Shanghai Chaori, a maker of cells to convert sunlight into power, plans to pay 4 million yuan in interest payment to bondholders instead of 89.8 million yuan in full, the company said yesterday. The stock has been suspended since Feb. 19.
A default would highlight the strain in China’s financial system after a trust product issued by China Credit Trust Co. was bailed out in January.
The Hang Seng China Enterprises Index (HSCEI) fell 0.6 percent, poised for the lowest close since Feb. 10. China kept its growth target unchanged, signaling limits to curbs on pollution and credit expansion. Investors are watching the National People’s Congress for clues to the next steps to fix local-government finances, rein in shadow banking and open up state businesses to private investment.
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