Emerging-Market ETF Falls as Tension in Ukraine EscalatesJulia Leite, Ksenia Galouchko and Harry Suhartono
The iShares MSCI Emerging Markets Index fell for the first time in three days as deadly shootouts in Ukraine stoked concern over more sanctions against Russia.
The exchange-traded fund retreated 0.6 percent to $41.75 at the close in New York. The MSCI Emerging Markets Index slipped 0.1 percent to 1,010.76. The Micex Index slumped after climbing 3.5 percent over the previous three days in Moscow, while the ruble extended this year’s slide to 7.9 percent. The Shanghai Composite Index tumbled the most in five weeks on speculation new share sales will draw funds away from existing equities.
Russia accused the Ukrainian government of failing to rein in extremists as escalating tensions threaten to undermine a diplomatic accord reached last week and stoke calls in the U.S. for economic sanctions. U.S. Vice President Joe Biden arrived today in Kiev to offer support for Ukraine’s democracy, sovereignty and economy as the administration weighs the imposition of economic sanctions on Russia, according to an official who briefed reporters on the plane.
“The Russia-Ukraine factor is coming into play,” Jeffrey Phillips, the Troy, Michigan-based chief investment officer at Rehmann Financial, which manages $2 billion in assets, said by phone. “It’s disrupting any sort of comfort that investors started to feel. It just leads to much greater uncertainty in emerging markets.”
Russia’s stocks and bonds dropped for the first time in four days. The weekend of violence added to skepticism about whether Ukraine, the U.S. and the European Union will be able to use the April 17 Geneva accord to hold Vladimir Putin accountable for easing tensions that the Russian president says he had no role in creating.
The Shanghai Composite Index slid 1.5 percent, the most since March 10. Regulators will start reviewing initial public offering plans this week, the China Business News reported. The yuan dropped to a one-month low amid speculation the central bank intervened to weaken the currency after data indicated a pickup in capital inflows.
India’s benchmark stock-index rose to a record as industrials, metal producers and banks advanced. Sesa Sterlite Ltd., owned by billionaire Anil Agarwal, was the best performer on the S&P BSE Sensex after the nation’s top court ended an 18-month ban on iron-ore mining in the western state of Goa. State Bank of India climbed 2.7 percent, a second day of gains.
South Korea’s won, Asia’s best performer this month, closed within 0.7 percent of a five-year high as Asian markets opened after the Easter weekend.
Brazil’s financial markets are closed for a holiday.
The premium investors demand to own emerging-market debt over U.S. Treasuries was unchanged at 288 basis points, according to JPMorgan Chase & Co.