Oil aftershock shakes rouble, naira to record lows

Oil-rich emerging markets were battered as crude prices plunged again and more weak data came out of China on Monday.

Russia’s rouble tumbled more than 3 percent to a new record low and Nigeria’s naira was reeling again less a week after it was devalued to try to stem its woes.

There was little sign the pressure was about to ease either as Brent crude fell more than $2 a barrel to a five-year low as its worst run since the 2008 financial crisis continued.

As the rouble slumped, Russia’s dollar-based RTS stock index dropped 4 percent to a five-year low, leading the charge down in a 1.3 percent slide in global emerging market stocks.

Other oil-heavy markets also suffered. Nigeria’s naira dropped 2 percent to a new record low against the dollar. Malaysia’s ringgit fell 2.4 percent, headed for its biggest two-day slide since the 1997-98 Asian financial crisis.

“This oil price situation is starting to percolate throughout the world,” said Brown Brothers Harriman strategist Ilan Solot.

“A lot of people are gradually moving from the excitement of cheaper oil means better consumption, more disposable income, to ‘this is getting a little scary’.”

Gulf stocks were also taking punishment from the weak oil price, with Dubai’s benchmark down 2.3 percent and Abu Dhabi, Qatar and Kuwait falling 0.4 percent each.

South Africa’s rand extended losses against the dollar on Monday, nearing three-week lows, after weak trade data underscored the growing fragility of Africa’s most advanced economy as as gold, one of its big revenue earners, tumbled after Swiss voters rejected a proposal that would have meant it had to up its gold holdings.

Weak Chinese manufacturing data added even more gloom.

MSCI’s Asia ex-Japan index was down almost 2 percent after Hong Kong shares were hit by poor retail sales data following recent street protests.

In contrast, Shanghai shares managed to hold their poise to end flat as shares in China’s big banks were supported by draft regulations for a new deposit insurance scheme.

A Moody’s rating downgrade for Japan sent the yen towards multi-year lows. That hit markets in the country’s competitors with Korean and Taiwanese stocks down 0.8 percent.

Central European stocks, which tend to benefit from lower oil prices, could not escape the rout as they were depressed by weak euro zone manufacturing data. Warsaw fell 0.5 percent while Budapest traded down 1 percent.

Turkey, however, did show that there are some economies that are expected to benefit as the Istanbul stock market hovered at a 1-1/2 year high.

Reuters