Russian stocks traded abroad are headed for the biggest annual drop in six years as companies from Yandex NV to OAO Megafon tumble amid a plunge in oil prices that is further slowing an economy already beset by sanctions.

The Bloomberg Russia-US Equity Index fell 48 percent this year through Dec. 26. The gauge of the country’s most actively-traded stocks traded outside the country is on pace for the worst performance since a 70 percent rout during the global financial crisis in 2008. Oil, Russia’s main export, sank into a bear market in October, accelerating the ruble’s 39 percent drop in 2014 and pushing inflation to the fastest in three years.

While equities had traded below 2013 levels all year as international sanctions linked to the Ukraine crisis throttled gross domestic product growth, they accelerated losses in late November in tandem with plunging oil prices amid a global supply glut. Some stocks, including the search-engine operator Yandex, that had been seen as withstanding the economic downturn are ending the year among the biggest decliners.

“Investor sentiment is negative both toward Russian companies targeted by sanctions and those that were considered to have some sort of cushion,” Konstantin Chernyshev, the head of research at UralSib Capital in Moscow, said by phone on Dec. 26. “A combination of political risks, economic deterioration and a range of legislative initiatives this year have made investors reluctant to put money into an emerging market with an economy that is not developing, but shrinking.”

Media Controls

GDP may contract as much as 4.7 percent next year, the most since 2009, under a “stress scenario” where oil averages $60 a barrel, the central bank said Dec. 15. Standard & Poor’s said Dec. 23 there’s at least a 50 percent chance it will reduce Russia’s BBB- rating below investment grade within 90 days, highlighting the risks the country face as it contends with sanctions and slumping crude prices.

Media stocks including Yandex, the operator of Russia’s biggest search engine, and TV broadcaster CTC Media Inc. (CTCM), have been further pressured as the government moves to increase control of communications amid the standoff with the U.S. and the European Union over the Ukraine conflict.

Russia earlier this year banned anonymous public access to the Web and allowed authorities to close sites without a court decision if material is deemed “extremist.” President Vladimir Putin signed a law in October requiring Russian media companies to reduce foreign ownership to 20 percent by the end of 2016. CTC Media is 75 percent owned by foreign shareholders, it said in September.

Yandex, CTC Media

After doubling last year, Yandex’s American depositary receipts have dropped 58 percent in 2014. CTC Media, which runs Russia’s sixth-biggest TV station, has declined 65 percent.

“Media stocks are seen as a proxy of the country’s economic situation, and as the economic decline prompts reductions in advertising budgets, stocks from Yandex to CTC Media take a hit,” Sergey Vasin, an analyst at OAO Gazprombank, said by phone from Moscow on Dec. 26. “The sentiment is worsening as the legislation passed this year adds to the general skepticism about the Russian stocks.”

Qiwi Plc, the electronic-payment processor that in November forecast its 2014 profit to surge as much as 70 percent, has lost 61 percent this year. Megafon, Russia’s second-largest wireless operator which gets most of its revenue domestically, has dropped 53 percent this year after gaining 41 percent in 2013.

Ruble Rebounds

While the ruble has tumbled the most in emerging markets in 2014, including a slide past 80 per dollar on Dec. 16 during the worst day in Russia’s nine-month financial crisis, it rose 11 percent last week even as Brent crude slid 3.1 percent. The currency recovered as central bank limits on ruble liquidity created a cash squeeze that boosted demand, while policy makers introduced measures to curb banks’ needs for dollars.

Putin, who earlier this month blamed the U.S. and its allies for the economic slump, said in a Dec. 25 speech to members of the government that the country’s difficulties “are also the result of our own shortcomings that have piled up over the years.” He told the ministers that they shouldn’t take two weeks off in early January when Russia celebrates the New Year, saying they “cannot afford such extensive holidays, at least not this year.”

The Bloomberg index of U.S.-traded Russian equities advanced 0.2 percent to 52.77 in the five days through Dec. 26, the first weekly gain since November. Stocks on the ruble-denominated Micex Index sell for an average 4.6 times projected 12-month earnings, the cheapest in emerging markets.

“At this point, I wouldn’t touch Russia,” Ilya Kravets, the New York-based director investment research at Daniloff Capital, said by phone on Dec. 23. “There are just too many uncertainties.”

Bloomberg