Risk back on as emerging market soars

Emerging stocks headed for their longest streak of monthly gains since 2005 as bets central banks will support economic growth helped offset concern the conflict between Ukraine and Russia is worsening. The ruble fell today.

Brazil’s Ibovespa extended its monthly surge to 8.8 percent on bets President Dilma Rousseff will lose her re-election bid amid faltering economic growth. Egyptian stocks led the monthly increase among markets in developing Europe and the Arab world, capping a 6.9 percent advance yesterday. The S&P BSE Sensex posted the longest monthly rally since 2007 yesterday. The ruble headed for its second monthly depreciation after Russia faced sanctions from the U.S. and European Union.

The MSCI Emerging Markets Index was little changed at 1,086.89 as of 2:09 p.m. in London. The developing-nation measure has risen 2 percent in August, poised for a seventh month of advances. The value of global equities reached a record $66 trillion this week on bets markets worldwide can withstand crises in Ukraine, the Gaza Strip and Iraq.

“Equities have tended to look through the geopolitical concerns in different parts of the world,” said John Lomax, an emerging-market strategist at HSBC Holdings Plc, said by phone from London. “The main driver has come from expectations that developed world interest rates will stay extremely low for a more sustained period.”

The emerging-markets gauge has risen 8.4 percent this year and trades at 11.3 times projected 12-month earnings, near the most expensive level since 2011, data compiled by Bloomberg show. The MSCI World Index of developed nations has gained 5 percent and is valued at a multiple of 15.

Cnooc Gains

Five out of 10 industry groups in the developing-nation gauge rose today, paced by health-care shares. Cnooc Ltd. added 2.9 percent in Hong Kong after first-half profit at China’s biggest offshore energy producer beat estimates.

Egyptian stocks yesterday posted their second monthly advance in a row. The gauge has increased 11 percent following former army chief Abdel-Fattah El-Sisi’s election victory in late May. El-Sisi, who ousted former president Mohamed Mursi in July last year, has made restoring order in the politically unstable country one of his top objectives.

The WIG30 Index added 0.1 percent today, extending its August gain to 3.9 percent. Data today showed Poland’s second- quarter gross domestic product expanded 3.3 percent from a year earlier, topping a preliminary estimate of 3.2 percent reported on Aug. 14.

Hungary Growth

Hungary’s BUX Index increased as much as 1 percent, taking its monthly gain to 1.3 percent. The nation’s economy will expand 2.9 percent in 2014, according to the latest Bloomberg News survey of analysts conducted from Aug. 22 to Aug. 27.

The ruble weakened for fourth day versus the dollar today, on course for a second monthly loss. The Micex Index lost 1.3 percent to the lowest level in two weeks on a closing basis, extending its decline since Russia annexed Ukraine’s Crimea in February to 2.7 percent.

The EU began talks in Moscow aimed at a temporary deal with Ukraine to allow natural-gas flows to resume, even as the bloc and the U.S. threatened Russian President Vladimir Putin with further sanctions.

Russia faces “more costs and consequences” as “has deliberately and repeatedly violated the sovereignty and territorial integrity” of Ukraine, U.S. President Barack Obama said yesterday.

More than 1,000 Russian troops are operating inside Ukraine, the North Atlantic Treaty Organization said yesterday. Ukrainian stocks slumped 10 percent in August, set to halt a four-month long rally.

China Stocks

The Hang Seng China Enterprises Index of mainland companies gained 0.3 percent today, trimming the first monthly loss in four. The Shanghai Composite Index rose 1 percent, extending its increase in August to 0.7 percent.

The Sensex advanced 2.9 percent in August after closing at a record yesterday. India’s markets are shut for a holiday today. Turkey’s Borsa Istanbul 100 Index, which is down 0.1 percent today, slipped 1.7 percent this month.

The premium investors demand to own developing-country debt over U.S. Treasuries narrowed one basis point to 279, according to JPMorgan Chase & Co. indexes.

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