Russ Oil-Gas

Sept. 5, 2008 - Bloomberg - by James Attwood -- Emerging market stocks fell for a sixth day, capping their largest weekly loss in six years, as commodities dropped on global growth concerns and Morgan Stanley said profit estimates were overly optimistic for this year. OAO Gazprom, Russia's largest company, tumbled for a fourth day. China Mobile Ltd., the world's biggest phone company by market value, dropped 2.4 percent, helping to send Hong Kong's benchmark stock index below 20,000 for the first time since April 2007. ``Emerging markets are seen as a leveraged play on the global economy,' Jing Ulrich, JPMorgan Chase & Co.'s chairwoman of China equities, said in an interview. ``If the global economy slows, then that will have a profound effect on emerging markets. It proves there's been no decoupling.' The MSCI Emerging Markets Index's five-day decline of 8.6 percent is the largest since July 2002. The index has declined 30 percent this year to the lowest since March 2007, trimming multiples to 11 times earnings from 19 in late October. The U.S. economy is ``stagnant,' Europe is falling into a recession, and central banks won't have much room to cut borrowing costs amid elevated prices, the Conference Board said. In emerging markets, earnings may rise an average 5 percent this year compared with the consensus forecast of 13 percent, Morgan Stanley strategists including Jonathan Garner wrote in a note. Morgan Stanley's forecast for next year is 7 percent compared with the 18 percent consensus estimate, they wrote. ``Valuations now suggest an earnings recession in emerging markets at least as bad as the 2001/02 cycle when emerging market earnings fell 18 percent peak to trough,' they wrote. Commodity Stocks Drop Russian stocks plunged and the cost to protect government bonds from default jumped to the highest in four years as the central bank shored up the ruble after investors pulled out a net $4.6 billion since the invasion of Georgia last month. Gazprom slid 3.7 percent to a 52-week low of $8.67. Russia's dollar-denominated RTS Index dropped 3.8 percent to 1,469.15.