Russian equities fell, capping their biggest weekly retreat since May as lenders dropped after Cyprus failed to get the financial support it sought from the Russian government and investors.
The Micex Index (INDEXCF) lost 1.2 percent to 1,441.36 by the close in Moscow, giving a 3.6 percent decline in the past five days, the most since the week ended May 18. The gauge closed at the lowest since Dec. 6, with eight stocks advancing and 42 sliding. Financial stocks led losses, trading down 1.9 percent on average, while OAO TNK-BP Holding, which isn’t in the measure, sank to a record low. OAO Sberbank, the nation’s largest lender, fell 2.3 percent, while VTB Group lost 0.9 percent.
Cyprus was “not able to get the support” it wanted, the Mediterranean island’s Finance Minister Michael Sarris said today after checking out of his hotel in downtown Moscow. A plan to tax deposits in Cyprus drove Russian shares to a three-month low on March 18. Euro-area finance ministers expect a proposal from Cyprus “as rapidly as possible” to raise the 5.8 billion euros ($7.5 billion) needed to trigger emergency loans, they said in a statement late yesterday.
“The market is concerned that Europe might disregard Russia’s interests in Cyprus’s bailout and the deposit levy might happen after all,” Alexei Yazikov, head of research at Aton Capital LLC, said by phone from Moscow. “The Cyprus-Russia talks led to nothing, the situation is the same. About 30 percent of Cyprus’s banking system consists of Russian money.”
Russian lenders and companies had about $31 billion placed in Cypriot banks or their own units at the end of 2012, according to a March 13 report from Moody’s. Bank loans to Cypriot companies of Russian origin created at least $30 billion in further exposure, the ratings company said.
The dollar-denominated RTS Index (RTSI$) retreated 1 percent to 1,470.91 today.
OAO Rosneft and OAO Gazprom, Russia’s biggest state-run oil and gas producers, weren’t interested in Cyprus’s offer to bid for offshore assets, a Russian government official said today, asking not to be identified because talks were private. Rosneft lost 1.9 percent to 237.80 rubles and Gazprom retreated 1.7 percent to 140.13 rubles in Moscow trading.
Cyprus had asked Russia for about 5 billion euros of funding in exchange for banking and energy assets, another government official said yesterday.
“Cyprus is running out of time for a banking rescue solution, and any new developments will shape sentiment today,” UralSib Capital analysts said in an e-mailed note.
The number of shares traded on the Micex was 39 percent below the 30-day average and 10-day price swings dropped to 13.79, data compiled by Bloomberg show.
Oil, Russia’s main export earner, increased 0.6 percent to $93.02 a barrel in New York, after dropping yesterday. Crude and natural gas account for about 50 percent of Russia’s budget revenue.
TNK-BP closed down 12 percent at 50.05 rubles, after tumbling as much as 19 percent. Rosneft, Russia’s largest oil producer, which yesterday completed the biggest takeover in Russian history, doesn’t plan to buy TNK-BP Holding (TNBP)’s minority stakes, Chief Executive Officer Igor Sechin, said today in an interview broadcast by national television channel Rossiya 24.
The Market Vectors Russia ETF (RSX), the largest dedicated Russian exchange-traded fund, retreated 0.5 percent today. The RTS Volatility Index, which measures expected swings in the index futures, fell 1.8 percent to 21.29.
The Standard & Poor’s GSCI Index of raw materials added less than 0.1 percent to 645.02. The Bloomberg Russia-US Equity Index (RUS14BN) of the 14 most-traded Russian stocks in the U.S. declined less than 0.1 percent to 97.73 today.
The Micex trades at about 5.2 times estimated earnings and has lost 3.6 percent this year. That compares with a multiple of 10 times for the MSCI Emerging Markets Index, which dropped 3.7 percent over the same period.
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