Emerging Stocks Rise as Russia Rallies With Oil; Currencies GainElena Popina and Natasha Doff
Emerging-market stocks rose for a fourth day as rebounding oil prices boosted the outlook for energy companies and investors bet that global central bank easing will buoy demand for developing-nation assets.
The dollar-denominated RTS Index of Russian stocks advanced the most among 93 primary equity gauges tracked by Bloomberg. Stocks in Dubai rallied 1 percent. A gauge of 20 emerging-market currencies tracked by Bloomberg rose 0.7 percent. The hryvnia plunged 31 percent as Ukraine loosened its management of the currency.
The MSCI Emerging Markets Index rose 0.1 percent to 982.21, taking its four-day advance to 2.1 percent. Crude gained for the fifth time in six days as volatility surged to the highest level since April 2009. The developing-nation stock gauge earlier dropped as much as 0.6 percent as the European Central Bank jolted markets with its decision to restrict access to funding lines for Greek banks.
“You are seeing oil prices rising, and there’s a lot of talk that oil’s at a bottom,” Timothy Ghriskey, chief investment officer at Solaris Asset Management LLC in New York, said by phone. “That is impacting a number of commodity producers, that are a part of the emerging-markets index. You also have a number of markets easing their monetary policy -- Europe, Australia, China. That’s benefiting emerging economies.”
Six of 10 industry groups in the emerging-markets measure gained, led by telecommunications and consumer staples stocks. A measure of energy stocks advanced to a two-month high.
The developing-nation stock gauge has gained 2.7 percent this year and trades at 11.7 times projected 12-month earnings, data compiled by Bloomberg show. The MSCI World Index has risen 1 percent and is valued at a multiple of 16.3.
The ruble strengthened 2.1 percent against the dollar. Data showed Russian inflation rose 15 percent in January from a year earlier, exceeding economists’ estimates for a 13.5 percent increase. The RTS Index jumped 4.4 percent. The ruble-denominated Micex Index advanced 2.4 percent in Moscow.
Brent crude, the oil grade traders use to price Russia’s main export blend, jumped 4.4 percent to $56.57 a barrel.
The Ibovespa dropped 0.1 percent, its first decline in four days. Brazilian stocks slid amid speculation a rally led by Petroleo Brasileiro SA that pushed the benchmark gauge’s valuation to a five-week high was excessive.
The hryvnia weakened to a record low against the dollar after Ukraine’s central bank scrapped the currency’s indicative rate and canceled daily auctions. The changes will revive the foreign-exchange market in Kiev, Vladislav Sochinsky, a treasurer at Citigroup Inc. said.
The Dubai Financial Market General Index jumped for the third time in five days. Stocks in Qatar rose 0.8 percent, while Saudi Arabia’s Tadawul All Share TASI Index added 0.1 percent.
The FTSE/Athex Banks Index tumbled 10 percent, with National Bank of Greece SA plummeting 12 percent and Piraeus Bank SA losing 15 percent.
The European Central Bank shut off its cheap financing channel for Greek lenders after Prime Minister Alexis Tsipras’s new government pledged to roll back spending cuts that accompanied 240 billion euros ($275 billion) of bailout loans. The banks will now have to borrow under a costlier emergency program, which may be halted if the ECB withdraws its permission for the Greek central bank to supply funds.
The Shanghai Composite Index retreated 1.2 percent as a cut in banks’ reserve-ratio requirements failed to soothe investors’ concern that the economic slowdown is deepening. China’s central bank said late Wednesday it’s lowering the reserve ratio by 50 basis points. Data over the past week showed manufacturing gauges contracting and services expanding at the weakest pace in six months.
China’s biggest banks will still have to keep 19.5 percent of deposits locked up. The one-year lending rate is 5.6 percent. Economists from Deutsche Bank AG, Bank of America Corp. and Nomura Holdings Inc. forecast more cuts to reserve requirements and interest rates.
The premium investors demand to hold emerging-market debt rather than U.S. Treasuries slipped five basis points to 376 basis points, according to JPMorgan Chase & Co. indexes.