Emerging Stocks Rise for Third Day as Turkey Rallies; Real Gains

Emerging-market stocks rose for a third day as Turkish equities rallied on bets Deputy Prime Minister Ali Babacan will remain in charge of the economy.

The Borsa Istanbul 100 Index rose to the highest level in three weeks, led by lenders Turkiye Garanti Bankasi AS and Akbank TAS. Brazil’s real led gains among developing-nations currencies on speculation President Dilma Rousseff will lose her re-election bid. Russian equities slipped 0.8 percent as President Vladimir Putin and his Ukrainian counterpart Petro Poroshenko met to discuss tension between the two countries.

The MSCI Emerging Markets Index added 0.3 percent to 1,088.39, the highest since August 2011. The gauge has gained 0.6 percent in the past three days. Turkish stocks surged 1.9 percent, the most in the world, after Yeni Safak newspaper reported incoming Turkish Prime Minister Ahmet Davutoglu has decided to keep Babacan in the cabinet, sparking bets the country’s economic policy won’t be disrupted.

“Rumors that Babacan will stay in charge of the economy may be pushing gains in the Turkish stock market,” Tony Hann, London-based head of emerging-market equities at Blackfriars Asset Management Ltd., said by e-mail. The meeting between Putin and Poroshenko “is important for a potential resolution of the Ukraine crisis,” he said.

Nine out of 10 industry groups in the emerging-markets measure rose, led by a 0.8 percent advance in the health care measure. The premium investors demand to own developing-country debt over U.S. Treasuries narrowed three basis points to 278, according to JPMorgan Chase & Co. indexes.

Currencies Gain

A Bloomberg gauge tracking 20 developing-nation currencies increased 0.1 percent, led by a 1.1 percent gain in Brazil’s real. A poll will show challenger Marina Silva beating President Dilma Rousseff in the October election, Veja magazine reported, without saying how it got the information. The Ibovespa rose 0.1 percent.

Turkish stocks surged to the highest since Aug. 4. Babacan, who has been in charge of the Treasury since the ruling AK party came to power in 2002, has shielded the central bank’s independence against government pressure.

Russia’s Micex Index fell for the second time in three days, led by declines in OAO Sberbank, the nation’s biggest lender. Putin met with Poroshenko in Minsk, Belarus, during a summit of the Customs Union, a Russian-led trade bloc.

European Union representatives were present at the talks aimed at providing respite to a conflict that the United Nations says has left at least 2,000 dead since Putin annexed the Crimean peninsula in March. The sides at times presented “radically different” positions, according Belarus President Aleksandr Lukashenko.

Geopolitical Tension

Ukrainian said yesterday an armored column including 10 tanks entered from Russia as the government in Moscow unveiled plans to send a second convoy with humanitarian aid into its neighbor’s rebel-held territory.

“Geopolitical tension remains the big risk. Any compromise over the Ukraine conflict would significantly ease investors’ concerns,” Warut Siwasariyanon, the head of research at Asia Wealth Securities Co. Ltd., said by phone in Bangkok.

Equities in Hungary and Poland gained at least 0.7 percent. Bank Gospodarki Zywnosciowej SA surged 14 percent to a record in Warsaw after BNP Paribas SA announced a bid to buy the Polish agriculture lender from Rabobank Groep.

Today’s advance boosted the 2014 increase for the MSCI Emerging Markets Index to 8.5 percent, beating the 5.3 percent gain in the MSCI World Index. The advance pushed developing-country valuations to 11.3 times projected 12-month earnings, compared with a multiple of 15.1 for the MSCI World.

The Shanghai Composite Index fell 1 percent, its second straight decline, on concern new share sales may divert funds.

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