Emerging-Market Currencies Fall as Oil Concern Outweighs China

Trading Emerging Markets on an Oil Market Comeback
  • Russian ruble, Colombian peso each weaken more than 1.5%
  • Hong Kong-listed Chinese shares narrow premium over Shanghai

Russia’s ruble led emerging-market currencies to their first decline in three days as oil prices fell from a five-month high, outweighing optimism that China’s economy is stabilizing.

The MSCI Emerging Markets Currency Index slipped 0.1 percent to 1,521.84 as the Russian ruble and the Colombian peso each weakened at least 1.5 percent. A gauge of emerging-market stocks rose 0.5 percent as gains in Asia outweighed losses in eastern Europe.

Oil-producing nations led the currency gauge lower as Brent crude fell 2.8 percent to $45.53, dropping from a five-month high amid renewed speculation that producers will be unable to agree on an output freeze to ease a global supply glut. The oil slump offset growing optimism that China’s economic slowdown isn’t worsening.

“Concern about a decline in oil drives all the main energy exporters in emerging markets down,” William Jackson, a senior emerging-markets economist at Capital Economics in London, said by phone. “This comes as data from earlier this month show that stimulus in China is coming through and the economy will avoid a hard landing.”

Ruble, Peso

The Micex Index retreated 0.5 percent in Moscow as energy producers including Tatneft PJSC declined. The ruble weakened 2.5 percent against the dollar, ending a three-day streak of gains. Colombia’s peso fell 1.5 percent. South Korea’s won was one of only two major emerging-market currencies advancing, strengthening 0.2 percent.

Emerging markets’ bond premium over Treasuries was unchanged at 378 basis points, according to JPMorgan Chase & Co. indexes.

Currencies also slid as investors weighed comments by European Central Bank President Mario Draghi, who said the ECB remains ready to step up stimulus if the outlook for the euro area worsens. His remarks came after policy makers kept interest rates unchanged at record lows and maintained asset purchases at 80 billion euros ($90 billion) a month. He predicted euro-zone inflation would pick up in the second half of this year and and pointed to an improvement in financing conditions.

Stocks

The MSCI Emerging Markets Index rose to 853.69. All 10 of the industry groups in the gauge rose, with telecommunications companies adding 1.2 percent. Saudi Arabian stocks entered a bull market after the price of crude, the kingdom’s main source of revenue, climbed above $45 for the first time this year. The Tadawul All Share Index, the benchmark gauge for the Arab world’s biggest bourse, followed measures in Dubai, Abu Dhabi and Qatar, which all passed the milestone this year.

The Hang Seng China Enterprises Index jumped 1.3 percent, pushing its gain from this year’s low to 23 percent from this year’s low. The Hang Seng China AH Premium Index, which measures the valuation difference between Chinese shares traded in Hong Kong and China, fell 1.6 percent to the lowest since Oct. 27.

Poland’s equity benchmark declined 0.2 percent, while stocks in Hungary dropped 0.7 percent. The Dubai Financial Market General Index climbed 1.1 percent. Turkey’s Borsa Istanbul 100 Index added 0.1 percent.

Tatneft retreated 2.6 percent in Moscow. China Mobile Ltd., the world’s largest wireless carrier, rose 3.6 percent in Hong Kong.

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