Emerging-Market Stocks Retreat as Oil Decline Saps Energy SharesNatasha Doff and Nguyen Kieu Giang
Emerging-market stocks fell for a fourth day as OAO Gazprom led energy companies lower. Brazil’s real led developing-nation currencies lower.
The dollar-denominated RTS Index of Russian stocks slid the most among 93 primary equity gauges. Gazprom fell 3.1 percent in Moscow. The real weakened 1.6 percent and the Ibovespa dropped the most in three weeks after the leader of Brazil’s Senate rejected President Dilma Rousseff’s plan to unwind tax breaks. PetroChina Co. and China Petroleum & Chemical Corp. sank at least 1.6 percent. Hong Kong’s Hang Seng China Enterprises Index lost 1.7 percent.
The MSCI Emerging Markets Index fell 1 percent to 976.27. A gauge of business activity grew less than estimated in the euro area before the European Central Bank meets to work on details of its bond-buying program. China’s leaders are gathered this week in Beijing to discuss policies. Brent crude slipped on concern the biggest increase in U.S. supplies in 14 years will add to a global glut.
“Russia is quite volatile on a day-to-day basis with oil, Ukraine and ruble noise,” Tony Hann, the head of emerging markets at Blackfriars Asset Management Ltd. in London, said by e-mail. Chinese stocks “will struggle to make much upward progress,” he said.
The developing-nation gauge has risen 2.1 percent this year and trades at 11.7 times projected 12-month earnings, data compiled by Bloomberg show. The MSCI World Index gained 3 percent in 2015 and is valued at a multiple of 16.7.
Eight out of 10 industry groups in the MSCI developing-country gauge decreased, led by energy companies. Bank of China Ltd. slid to a three-week low as the Hang Seng China Enterprises gauge sank to the lowest closing level since Feb. 11.
The RTS Index declined 3 percent while the ruble depreciated 0.3 percent against the dollar. Russia sold 87 percent of floating-rate bonds offered at an auction on Wednesday amid declining yields for ruble debt.
The country, facing its first recession since 2009, was forced to cancel 27 bond sales in 2014 due to surging borrowing costs as the ruble plunged amid sanctions over the Ukraine conflict. Brent crude lost 0.8 percent in London to $60.55 a barrel.
The real declined to 2.9798 per dollar. Senate leader Renan Calheiros said Tuesday that Rousseff’s tax plan had to be presented as legislation and not a provisional decree requiring quick approval in Congress. The move added to concern that she will struggle to shore up finances. The Ibovespa dropped 1.6 percent.
A gauge tracking developing-nation currencies fell for a fifth day, losing 0.4 percent. The Turkish lira weakened 1.1 percent versus the dollar amid bets the central bank will lower borrowing costs when the rate-setting committee meets on March 17.
President Recep Tayyip Erdogan and other government officials have pressured Governor Erdem Basci to lower interest rates since policy makers more than doubled the main rate more than a year ago to stem a slide in the lira. The benchmark Borsa Istanbul 100 Index decreased 2.7 percent.
The Shanghai Composite Index added 0.5 percent amid data showing an expansion in services. China Premier Li Keqiang is expected to announce a 2015 economic growth goal of about 7 percent on Thursday, when the National Peoples’ Congress starts its annual meeting, down from last year’s 7.5 percent.
The premium investors demand to own emerging-market debt rather than U.S. Treasuries increased two basis points to 346 basis points, according to JPMorgan indexes.
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