RTS Futures Drop as Mechel Leads Slump on Oil: Russia Overnight
RTS stock-index futures fell and Russian companies’ U.S.-traded shares dropped the most this month as oil ended a three-day rally and speculation grew that governments plan more stimulus steps to shore up global growth.
Futures on Russian equities declined 0.7 percent to 146,595. The Bloomberg Russia-US Equity Index (RUS14BN) of the most-traded Russian companies in New York lost 0.8 percent to 98.47 yesterday, the biggest retreat since Aug. 30. OAO Mechel (MTL) sank 3.1 percent to $6.77 in New York to trade at the biggest discount versus the company’s Moscow shares this month. Yandex NV (YNDX), owner of Russia’s most-used search engine, slid 1.4 percent to $22.64.
Oil, which together with gas accounted for half of Russia’s budget revenue in 2011, was little changed after slipping as much as 1.1 percent in intraday trading on concern the European debt crisis is spreading and as China reported imports fell in August and industrial output rose the least in three years. Russia is the world’s biggest energy exporter and the European Union is the country’s biggest trading partner. The Bloomberg Russia-US gauge rose the most since June last week.
“The enthusiasm is gone,” Ilya Kravets, a portfolio manager a ED Capital, said in a telephone interview yesterday from New York. “It’s unclear when and how the decision on new stimulus measures will be approved. Europe remains a concern. If the EU is not doing well, investors won’t put money in riskier Russian assets.”
Russia ETF Slides
The Market Vectors Russia ETF (RSX), the biggest U.S.-traded exchange-traded fund that holds Russian shares, fell 0.6 percent to $28.77. The RTS Volatility Index retreated 0.6 percent to 27.83.
The Federal Open Market Committee is set to meet tomorrow and Sept. 13 to discuss monetary policy. Chinese imports fell 2.6 percent in August from a year earlier as exports rose 2.7 percent, the customs bureau said yesterday. China’s industrial output rose the least in three years, the National Bureau of Statistics said on Sept. 9. Macquarie Group Ltd. cut its forecasts for China’s economic growth, according to a report dated yesterday.
Greece’s Democratic Left leader Fotis Kouvelis, whose party is one of the three in the coalition government, said that no decision had been made on the cuts required to obtain further aid for the country’s bailout, and that poorer citizens must be protected from austerity measures.
Mechel (MTLR) settled at a 2 percent discount to its Moscow-listed shares, the widest since Aug. 31. The stock rose 1.7 percent to 218.70 rubles, or $6.91, in Moscow yesterday, the highest price since Aug. 14.
Russian assets also declined on prospects the nation’s central bank may increase rates as soon as at its Sept. 13 meeting in Moscow, Kravets said.
Bank Rossii is to decide on its lending rates this week after a Sept. 4 report showed inflation accelerated in August to near the upper limit of the bank’s target. Russia is the last major emerging economy to keep borrowing costs unchanged this year. HSBC Holdings Plc and Goldman Sachs & Co. expect the bank will raise its refinancing rate to 8.25 percent from 8 percent, increase its repurchase rate to 5.50 percent from 5.25 percent and the overnight deposit rate to 4.25 percent from 4 percent, according to Bloomberg surveys.
“Bank Rossii has to react to accelerating inflation,” said Alexander Morozov, chief economist for Russia at HSBC, said by phone from Moscow yesterday. “It’s time for the bank to act. An increase in lending rates will have a negative impact on ruble-denominated bonds and the stock market.”
The central bank has held its refinancing rate at 8 percent, a quarter-point above the record low, since December.
Oil for October delivery was little changed at $96.54 a barrel on the New York Mercantile Exchange yesterday. Prices have declined 2.3 percent this year. Brent oil for September settlement advanced 0.5 percent to $114.81 a barrel on the London-based ICE Futures Europe exchange.
Urals crude, Russia’s chief export blend, also ended little changed at $112.81 per barrel yesterday.
OAO Surgutneftegas (SGTPY), Russia’s fourth-largest oil producer after OAO Rosneft, OAO Lukoil and BP Plc’s Russian subsidiary TNK-BP, fell 0.4 percent to $6.9 yesterday. In Moscow, the stock retreated 0.8 percent to 21.682 rubles, or 68.5 U.S. cents. One ADR equals 10 common shares.
Yandex declined the most since Aug. 30. Its share of Russia’s Internet searches fell in the week to Sept. 9, while the portion of Google Inc. (GOOG) rose and Mail.ru Group Ltd. (MAIL)’s share remained steady, according to Liveinternet.ru.
United Co. Rusal, the world’s largest aluminum producer, dropped 2.2 percent to HK$4.09 in Hong Kong trading as of 11:21 a.m. local time. The MSCI Asia Pacific Index fell 0.6 percent.
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