Natasha Doff and Zahra Hankir Hanoi

Emerging market stocks climbed from a one-month low yesterday as Russian equities rebounded amid bets any sanctions after the Crimea referendum may be milder than expected. China’s plan to improve urban housing lifted builders.

The Micex index, which fell into bear market territory last week, rallied 2.4 percent by 2pm in Moscow, the most among 94 global equity gauges. Ukraine’s hryvnia weakened 1.2 percent against the dollar, while the rouble slipped 0.1 percent.

Stocks in Hungary, Turkey, Poland and the Czech Republic added 1.1 percent or more.

The Hang Seng China Enterprises index rose 0.4 percent, snapping a five-day drop, after Beijing said on Sunday that it would invest over 1 trillion yuan (R1.7 trillion) redeveloping shantytowns this year. Property developer China Vanke rose 3.1 percent in Shenzhen.

The MSCI emerging markets index gained 0.3 percent to 940.82 by 10.05am in London.

The US and the EU warned Russia not to annex Crimea after a referendum in Ukraine’s southern region, setting the stage for sanctions on Moscow.

“This is a classic case of ‘buying the fact’ after so much selling in the past two weeks,” said Simon Quijano-Evans, the head of emerging markets research at Commerzbank. “The market is now trying to ‘understand’ what happens next.”

Results show that about 97 percent of voters in Crimea chose to leave Ukraine and become part of Russia.

Western countries have threatened sanctions against Russia if it did not back down on annexing Crimea. Russia had deployed about 60 000 troops along Ukraine’s border, the government in Kiev said.

Gazprom snapped a seven-day drop in Moscow, advancing 1.7 percent. The yield on benchmark 2027 rouble-denominated government bonds fell 10 basis points to 9.61 percent after hitting a record high last week.

“Judging by all the political action of the past months, we can definitely see a further escalation in tension,” Quijano-Evans said.

MSCI’s emerging markets index is down 6.2 percent this year and trades at 10 times projected 12-month earnings.

Nine of 10 industry groups in the index rose yesterday, led by industrial and material companies.

The MSCI world index for developed countries has lost 1.1 percent in the period, and is valued at 14.6 times forward earnings. – Bloomberg