Russia, India Lead Emerging Market Gains on Goldman, Fed Deals

By Emma O'Brien

Sept. 24 (Bloomberg) -- Emerging market stocks gained as Warren Buffett's backing of Goldman Sachs Group Inc. and the Federal Reserve's currency swap deal with four central banks lured investors back to riskier assets.

Russia's dollar-denominated RTS Index gained 3.9 percent to 1,321.62 in Moscow and the government's 30-year dollar bonds increased for the first time in three days, lowering the yield by 4 basis points to 6.93 percent. The Bombay Stock Exchange Sensitive Index, or Sensex, jumped as much as 2 percent, helping lift the MSCI Emerging Markets Index by 0.2 percent to 831.67.

``When a big investor shows he has confidence in Goldman Sachs that's naturally supportive for financials and the Fed's swap deal addresses one of the biggest problems at the moment which is limited liquidity,'' said Beat Siegenthaler, chief strategist for emerging markets in London at TD Securities Ltd. ``Emerging markets are at the mercy of the global story and that is overriding most country-specific issues at the moment.''

Goldman will raise more than $7.5 billion by selling stakes to Buffett's Berkshire Hathaway Inc. and through public stock offerings. The Fed arranged to channel $30 billion into the global financial system by opening currency swap lines with central banks in Australia, Norway, Denmark and Sweden, helping to ease dollar shortages.

Russia's ruble-denominated Micex Index climbed 2.7 percent to 1,100.08 before trading was halted at 4:20 p.m. in Moscow because of ``technical'' problems, according to spokesman Alexei Gerasyuk. Trading will resume an hour after the suspension, he said.

China's CSI 300 Index, which tracks yuan-denominated A shares, advanced 0.7 percent to 2,138.85.

Romania Rises

Romania's benchmark BET Index rose 0.5 percent to 4,626.19 after the government suspended a 16 percent capital gains tax on stock market investments and cut transaction fees. The Bucharest Stock Exchange index has lost 53 percent in the past year.

Romania also plans to sell stock in state companies such as Nuclearelectrica SA, operator of the country's nuclear reactors. Romania's leu strengthened 0.3 percent against the dollar today.

The ruble strengthened 0.6 percent to 24.9407 against the dollar. Russian markets were boosted by a jump in the price of oil, the country's biggest export earner. Crude for November delivery gained as much as 2.7 percent to $109.50 a barrel in electronic trading on the New York Mercantile Exchange, as investors anticipate a government report will show U.S. crude and fuel inventories fell last week.

Oil `Comfort'

``We're seeing a relief rally driven by low valuations after recent declines in emerging markets,'' said Peter Westin, an equities strategist at JPMorgan Chase & Co. in Moscow. ``Oil is definitely providing some comfort.''

OAO Lukoil, the biggest non-state oil company in Russia, gained 0.6 percent to 1,659 rubles on the Micex before trading stopped. The yield on Lukoil's 7.1 percent bond maturing in 2011 dropped 100 basis points to 9.12 percent today, the lowest in two weeks.

OAO Gazprom, the world's largest natural-gas producer and Russia's biggest borrower, jumped 5.7 percent to 215 rubles after Kommersant reported it plans to pay back 230 billion rubles ($9.2 billion) of debt by the end of the year.

Emerging-market stocks are the cheapest relative to their earnings since July 2005, with the MSCI Emerging Markets Index valued at 10.9 times the profits of its companies last week, according to data compiled by Bloomberg.

``There's really some excellent bargains out there,'' Mikhail Galkin, director of fixed-income and credit research at MDM Bank in Moscow, said in an interview with Bloomberg Television today.

The extra yield investors demand to own developing nations' bonds instead of U.S. Treasuries increased 4 basis points to 3.63 percentage points, according to JPMorgan's EMBI+ index at 1:47 p.m. in London. A basis point is 0.01 percentage point.

To contact the reporter on this story: Emma O