Russian stocks dropped in U.S. trading for the first time in three days and bearish bets on the nation’s equities rose to a 20-month high as crude oil, the country’s top export earner, declined.
The Bloomberg Russia-US Equity Index of Russian stocks listed in New York slipped 0.9 percent to 108.51 yesterday, led by OAO Sberbank (SBRCY), Russia’s biggest lender, and coking coal producer OAO Mechel. The ratio of outstanding puts to sell the Market Vectors Russia exchange-traded fund, a U.S.-listed ETF that holds Russian shares, versus calls to buy rose to 2.2-to-1 yesterday, the highest level since July 2010, according to preliminary data compiled by Bloomberg. Futures on the RTS Index expiring in June fell 0.5 percent to 164,375 in the U.S.
Brent, the oil type which underpins prices for Russia’s Urals crude, fell yesterday after Charles McConnell, acting assistant for fossil energy at the U.S. Energy Department, said the nation is considering releasing supplies from its strategic reserves. Sales of oil and gas provided almost 50 percent of the Russian government’s revenue last year and make up 17 percent of gross domestic product. Three of the biggest five stocks on the Russia-US measure are energy shares.
“It’s hard for Russia to rally when the oil price is down,” Ian Hague, who manages Russian equities as a partner at Firebird Asset Management, which oversees $1.3 billion, said by phone in New York yesterday. “The Russian market follows the oil prices.”
OAO Lukoil (LUKOY), Russia’s biggest non-state oil producer, lost 0.6 percent to $63.40 in New York yesterday, after trading little changed at 1,846.40 rubles, or $63.58, on Moscow’s Micex Index. (INDEXCF) One depositary receipt is equal to one ordinary share.
Urals Crude Forecast
OAO Gazprom Neft (GZPFY), the oil arm of Russia’s natural gas export monopoly, fell 0.3 percent to $26.76 in U.S. trading, while the Moscow-based company’s Micex stock added 0.9 percent to 155.69 rubles, or $5.36.
Russia’s Economy Ministry may increase its forecast for Urals crude to average about $100 a barrel, from the current prediction for $97, the RIA Novosti newswire reported yesterday, citing Deputy Economy Minister Andrei Klepach.
Crude oil for May delivery rose 0.3 percent to $107.33 a barrel on the New York Mercantile Exchange, the highest settlement since March 19, as confidence among U.S. consumers in March held close to a one-year high. Futures have gained 8.6 percent this year after increasing 25 percent in the fourth quarter of 2011.
Brent oil for May settlement fell 0.1 percent to settle at $125.54 on the London-based ICE Futures Europe exchange. Urals crude, Russia’s chief export blend, lost 0.3 percent to $122 yesterday.
The 30-stock Micex Index (MICEX) slid 0.7 percent to 1,554.28 yesterday in Moscow. The dollar-denominated RTS fell 0.8 percent to 1,699.68. The Bloomberg Russia-US measure rallied 1.2 percent to the highest level in a week on March 26.
“We’ve had a tremendous rally in the Russian market in the last few days,” Alec Young, global equity strategist at S&P Capital IQ, said by phone. “After a big up day, you generally see some profit-taking.”
Sberbank’s (SBRCY) American depositary receipts tumbled 3 percent to $13.45 in New York, while the stock fell 2.2 percent to 97.84 rubles, or $3.37, in Moscow. One depositary receipt is equal to four ordinary shares.
The Market Vectors Russia ETF (RSX) fell 1.7 percent to $31.54 yesterday, the biggest one-day drop since March 22. The RTS Volatility Index (RTSVX), which measures expected swings in the index futures, added 0.8 percent to 31.12.
ADRs of Moscow-based Mechel, Russia’s largest producer of coal for steelmakers, fell 2.4 percent to $9.70 in New York yesterday, the lowest close since March 6.
Russia’s environmental watchdog said yesterday it will complete a review of Mechel’s Yakutugol coal division next week, after the Natural Resources Ministry reported “significant” license violations by the unit operating in the nation’s Far East.
The watchdog is preparing a report and will submit it to the Subsoil Resource Agency, which oversees licensing, after the inspections are completed on April 4, the regulator known as Rosprirodnadzor said yesterday in a statement on its website. Both oversight bodies are part of the ministry.
Rosprirodnadzor replaced an earlier statement on its website, removing a line that said reports of “significant” license violations at the coal-mining unit were “erroneous.”
Mechel didn’t see where it could have significant violations and expected to resolve any issues after getting the report, Ekaterina Videman, a company spokeswoman, said on March 22.
The company’s ADRs (MTL) are trading at a 2.9 percent discount to its Moscow shares, the widest gap since March 5, data compiled by Bloomberg show. Mechel (MTLR) rose 1.4 percent to 290 rubles, or $9.99, on the Micex yesterday. One New York-listed ADR is equal to one ordinary share traded in Moscow.
United Co. Rusal (486), the world’s largest aluminum producer, slumped 4.7 percent to HK$5.52 in Hong Kong trading as of the noon break. The MSCI Asia Pacific Index fell 0.6 percent today as profit reports showed earnings are worsening in China.
OAO Rostelecom (ROSYY), Russia’s biggest fixed-line phone provider, slipped 1.6 percent to $30.40 in New York yesterday, the biggest one-day drop since March 22. Rostelecom (RTKM) dropped 0.6 percent to 147.07 rubles, or $5.06, on the Micex. One ADR of Rostelecom is equal to six ordinary shares.
Mamut may be paid in part with 100 percent of SUP Media, currently owned by billionaire Alisher Usmanov, who controls 31 percent of MegaFon, the Moscow-based newspaper reported, citing an investment banker and unidentified people close to the companies’ shareholders.
The sale may be completed in two to three months, Kommersant said, citing one of the unidentified people. VimpelCom (VIP) Ltd., which controls 49.9 percent of Euroset, didn’t use an option to acquire an additional 24.95 percent stake, the newspaper reported.
VimpelCom lost 0.5 percent yesterday in New York to $10.95.
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