Russia’s Micex (INDEXCF) Index had the biggest weekly drop in seven months as Europe’s debt crisis deepened and crude oil, the country’s main export earner, retreated on worse-than-expected U.S. economic data.
The 30-stock Micex fell 1.3 percent to 1,271.48 by the close in Moscow, posting an 8.3 percent loss in the week, the most since Sept. 25. The gauge extended declines from a March 14 high yesterday, breaching the 20 percent threshold analysts say marks a bear market. OAO Raspadskaya, a coal producer, and preferred shares of OAO Surgutneftegas, the country’s fourth-largest oil producer, retreated 19 percent in the week.
Russia’s Urals crude slid 0.5 percent to $106.31 a barrel, a 3.5 percent weekly drop. Moody’s Investors Service lowered debt ratings at 16 Spanish banks, while Fitch Ratings cut Greece’s credit rating on concern the country may abandon the euro. The Federal Reserve Bank of Philadelphia’s general economic index slid to minus 5.8 in May, data showed yesterday. China’s home prices fell in a record number of cities in April.
“The most complicated factor that continues to weigh down the Russian market is the threat of Greece exiting the European Union,” Victor Bark, who oversees $1 billion in assets as the head of asset management at Alfa Capital Partners Ltd., said by phone from Moscow. “Moody’s rating is adequately reflecting the situation in Spain. The market is oversold, the panic should stop, but there is still more room for a decline.”
Russia received almost 50 percent of budget revenue from oil and gas sales last year, according to government estimates. Brent traded little changed at $107.35 a barrel. The MSCI Russia Energy Index lost 13 percent this week.
Russia-focused equity funds posted redemptions of $53 million in the week ended May 16 compared with $188 million the week before, according to Troika Dialog, which cited EPFR data.
“The news flow from the European debt front remains unsupportive,” Peter Szopo, the head of research at Alfa Bank, wrote in an e-mailed note. “Yesterday’s U.S. data were poor. Chinese data also came in weak this morning.”
Russia was the first of the so-called BRIC countries to enter a bear market in 2012. The BSE India Sensitive Index is down 12 percent from its peak and Brazil’s Bovespa Index is down 21 percent. The Shanghai Composite Index (SHCOMP) has been in a bear market for more than a year.
OAO Sberbank, Russia’s biggest lender, fell 2.8 percent to 78.40 rubles. The bank’s shares have dropped 14 percent this week and trade at 5.1 times estimated earnings. The MSCI Russia Finance Index slid 16 percent this week.
“Whoever was selling Russia this week, was selling Sberbank as a key Russian company,” Bark said.
The dollar-denominated RTS fell 1.8 percent to 1,289.46, the lowest level since Oct. 6. The index’s 3.6 percent slide on May 14 saw it breach the bear-market threshold.
The MSCI BRIC Index for shares in Brazil, Russia, India and China slid into a bear market yesterday. The MSCI Emerging Markets Index headed for its biggest weekly retreat in seven months.
Prime Minister Dmitry Medvedev held a budget meeting today and is preparing for the Group of Eight summit in Camp David, where he’ll be replacing President Vladimir Putin.
Billionaire Mikhail Prokhorov turned down the post of deputy prime minister for industry as Medvedev tries to form a new government, Vedomosti reported today, citing unidentified Kremlin officials.
Sergei Kiriyenko, chief executive officer of Rosatom Corp., declined to become deputy prime minister for energy, while Economy Minister Elvira Nabiullina won’t continue in her post in the new government and also turned down an offer to become a deputy prime minister for social issues, Vedomosti said.
A Kremlin official, who declined to be identified because of state policy, said Prokhorov hadn’t been offered a post, when contacted by Bloomberg. Yuliana Slaschova, Prokhorov’s spokeswoman, declined to comment.
Anton Siluanov is likely to keep his position as Finance Minister, Interfax reported, citing his deputy Sergei Storchak. Medvedev will not announce the members of the new cabinet today, the Prime Minister said during the budget meeting in Moscow today.
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