Emerging Stocks Drop on Oil as Ruble Trims Worst Year Since 1998

Emerging-market stocks fell, with the benchmark gauge heading for a second year of declines, as energy companies retreated with oil.

PetroChina Co. and OAO Gazprom sank at least 2.8 percent as oil traded near the lowest levels since 2009. Dubai’s DFM General Index slid 5.4 percent to lead Gulf Cooperation Council equity gauges lower. Russia’s ruble rose 4.1 percent versus the dollar, paring its drop this year to 41 percent. The Ibovespa declined 1.2 percent in Sao Paulo. Petroleo Brasileiro SA fell for a third day as a corruption investigation squelched demand for the Brazilian state-run oil producer’s shares.

The MSCI Emerging Markets Index lost 0.4 percent to 954.58. The gauge has fallen 4.8 percent this year as a slump in oil spurred a rout in commodity producers and speculation that the U.S. will raise interest rates damped demand for riskier assets. A measure of developing-nation energy shares is poised for its steepest annual drop since 2008. Reports this week may show China’s economy is losing momentum.

“Oil-related markets have been soft today, due to the drop in oil prices overnight,” Mika Kannisto, a money manager at FIM Asset Management Ltd in Helsinki, said by e-mail. “Volumes are very thin because some markets have already closed for the year and many have their last trading day today.”

Eight out of 10 industry groups in the emerging-markets measure fell, with the gauge of energy shares poised for a 28 percent slump this year. Oil has slumped 45 percent this year, set for the biggest annual decline since 2008, as the highest U.S. production in more than three decades contributed to a global surplus estimated by Qatar at 2 million barrels a day.

Russia, Brazil

The premium investors demand to hold emerging-market debt over U.S. Treasuries widened three basis points to 349 basis points, according to JPMorgan Chase & Co. indexes. A gauge tracking 20 developing-nation currencies strengthened 0.5 percent.

The ruble appreciated after earlier retreating as much as 1.8 percent amid speculation Russia stepped in to shore up the currency on the final trading day of the year. Gazprom lost 3.8 percent in Moscow as the Micex Index declined 2.5 percent. A Moscow court found opposition leader Alexey Navalny guilty of fraud and money laundering and issued him a suspended sentence.

Petroleo Brasileiro declined 2.5 percent in Sao Paulo. The oil company’s managers, including Chief Executive Officer Maria das Gracas Foster, have given access to their computers, phones and offices to independent investigators who have a one-year mandate to probe corruption allegations, Foster told reporters Dec. 17.

Relative Value

Dubai’s equity gauge declined for a fourth month. Saudi Arabia’s Tadawul All Share Index sank 4.2 percent, while Qatar’s stock index decreased 1.9 percent.

The developing-nation gauge trades at 11.1 times projected 12-month earnings, compared with its three-year average of 10.4, data compiled by Bloomberg show. The MSCI World Index has risen 3.6 percent this year and is valued at a multiple of 15.6.

Hong Kong’s Hang Seng China Enterprises Index retreated 1.5 percent and the yuan strengthened 0.4 percent. An official Purchasing Managers’ Index for December is expected to indicate Chinese manufacturing failed to expand for the first time in more than two years, based on the median estimate of economists surveyed by Bloomberg before the data are released on Jan. 1.

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