Russian ADRs Drop in U.S. Ahead of Protests: Russia Overnight
Russian equities traded in the U.S. fell the most in a week and OAO Mobile TeleSystems (MBT)’s premium over Moscow-listed shares shrunk to the smallest this month as stocks in U.S. fell and Russian police searched homes of anti- presidential protest leaders.
The Bloomberg Russia-US Equity Index (RUS14BN) of the most-traded Russian companies fell 1.1 percent to 84.62 in New York yesterday, falling the most since June 1. OAO Mobile TeleSystems, Russia’s biggest mobile phone company, slumped the most since May 30, shrinking the premium over its Moscow shares to the lowest since May 22. OAO Gazprom Neft (GZPFY), the oil arm of Russia’s gas export monopoly, rose to the highest since May 11, swelling premium to the Moscow shares to the highest since Jan. 25. Russian markets remain closed today because of holidays.
Stocks in U.S. and Europe on skepticism Spain’s 100 billion euro ($125 billion) bank bailout will contain the sovereign debt crisis. Opposition to President Vladimir Putin plan a rally on the Russia Day Holiday today following the biggest street protests in a decade against the government policies. Russian police have searched the homes of opposition leaders including Alexey Navalny, Sergei Udaltsov, Ilya Yashin yesterday, Russia’s Investigative Committee said in a June 11 statement.
“Investors don’t yet have any confidence in the Russia domestic story,” Chris Weafer, chief strategist at Troika Dialog in Moscow, said via e-mail yesterday. “Instead they use Russian equities as a bet on global market trends, so when confidence fades Russian stocks move weaker. There has been a policy vacuum in Russia and the headlines have been dominated by political transition and protests.”
Mobile TeleSystems, known as MTS, declined 2.4 percent to $17.41 yesterday, shrinking its premium to the company’s Moscow shares to 21.2 percent, the least since May 22. Gazprom Neft advanced 1.4 percent to $21.46, trading at a 3 percent premium to Moscow shares, the highest since Jan. 25. Russian markets are closed for a second day today for the Russia Day holiday.
The government has given permission for 50,000 people to take part in the protest today.
“Tuesday is a very key day,” Weafer said. “The planned protest in Moscow is the first big potential clash between a much more determined and hard core protest group and the new government. If there is a clash then it will further marginalize the Russia investment case.”
Russia ETF Declines
The Market Vectors Russia ETF (RSX), a U.S.-traded fund that holds Russian shares, tumbled 2 percent to $24.59 yesterday, dropping the most since June 1.
“The real consequence from the continuing threat of political instability is that the pool of investors active in Russia remains small,” Weafer said. “These headlines keep those that do not need to be in Russia firmly outside.”
Yandex NV (YNDX), the owner of Russia’s most-used search engine, sank 6.5 percent to $17.71 yesterday, the lowest level since Dec. 19. The company was the worst performer on the Russia-U.S. Equity Index yesterday, followed by VimpelCom Ltd. (VIP) and OAO Mechel. (MTLR)
VimpelCom Ltd., the world’s sixth-biggest mobile phone provider, retreated 3.5 percent to $7.66, dropping the most since May 30. The stock fell for the first day in six yesterday.
United Co. Rusal, the world’s largest aluminum producer, slid 1.9 percent to HK$4.75 in Hong Kong trading as of 10:44 a.m. local time.
Crude oil for July delivery slumped 1.7 percent to $82.70 a barrel on the New York Mercantile Exchange yesterday, the lowest settlement since Oct. 6. Prices have fallen 16 percent in 2012.
Urals crude, Russia’s chief export blend, sank 3.2 percent to $95.13 yesterday, dropping to the lowest level since Jan. 27, 2011. Oil, together with natural gas, accounted for about 50 percent of budget revenue in 2011, according to government data.
OAO Lukoil (LUKOY), Russia’s second-biggest oil producer after OAO Rosneft, tumbled 2 percent to $51.95, trading at a 0.4 percent discount to the company’s Moscow-listed shares, the biggest gap since May 22.
Brent oil for July settlement dropped 1.5 percent to $98 a barrel on the London-based ICE Futures Europe exchange yesterday. Brent oil, a benchmark for more than half the world’s crude, has fallen 22 percent since its highest close this year on March 13 through yesterday.
Spain asked euro-region governments over the weekend for as much as 100 billion euros ($125 billion) to help shore up its banking system. Spain became the fourth euro member -- following Greece, Ireland and Portugal -- to seek a bailout since the debt crisis began almost three years ago, after its borrowing costs approached euro-era highs.
The Standard & Poor’s GSCI Spot Index retreated 1 percent to 582.43.
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