Emerging ETF Declines on Ukraine Tension as Micex TumblesJulia Leite, Lyubov Pronina and Phani Varahabhotla
The iShares MSCI Emerging Markets Index dropped to a month low on concern the crisis in Ukraine will escalate before Crimea’s residents vote in a separatist poll. Russia’s Micex Index tumbled to the lowest since 2010.
The exchange-traded fund fell 1.8 percent to $38.19 at 4 p.m. in New York. The MSCI Emerging Markets Index declined 0.2 percent to 943.19. Ukraine’s UX Index led losses among the 94 world stock gauges tracked by Bloomberg, while the Micex sank 2 percent. Brazil’s Ibovespa erased earlier gains, approaching a bear market. The Shanghai Composite Index advanced 1.1 percent amid speculation the securities regulator will allow listed companies to sell preferred shares for the first time.
German Chancellor Angela Merkel today joined calls for Russia and Ukraine to hold talks, with threats of sanctions from the European Union as early as next week if President Vladimir Putin doesn’t “contribute to detente” before a separatist vote in Crimea scheduled for March 16. Russia’s 50-stock benchmark has dropped 14 percent this month as pro-Russian forces surrounded military bases and airports in the Crimea.
“There’s a lot swirling there,” Mark Luschini, chief investment strategist at Philadelphia-based Janney Montgomery Scott LLC, which oversees $63 billion in assets, said by phone. “The unresolved aspect of it just leaves uncertainty as an overhang to equity prices.”
The ETF gained earlier today after data showed U.S. jobless claims unexpectedly fell last week to the lowest since the end of November, while a measure of retail sales rose in February for the first time in three months.
Brazil’s Ibovespa extended a decline from its Oct. 22 peak to more than 19 percent as state-controlled oil producer Petroleo Brasileiro SA snapped a two-day rally.
Russian bonds and the ruble fell for a fifth day as tension persisted in Ukraine before residents of the Crimea region vote in a separatist poll. The Micex Index of equities dropped for a third day, while Ukraine’s UX Index tumbled 2.8 percent.
China’s stocks gained as Agricultural Bank of China Ltd. and Shanghai Pudong Development Bank Co. surged more than 3 percent on media reports that lenders may be the first batch of companies to take part in a preferred-stock trial. That helped offset concern the economy is slowing after a report showed that industrial output trailed estimates.
The premium investors demand to own emerging-market debt over U.S. Treasuries rose 0.08 percentage point to 327 basis points, according to JPMorgan Chase & Co.