Russian equities dropped for a fourth day as crude oil declined and preferred shares of OAO Surgutneftegas slumped. The central bank meets today to discuss interest rates.
The gauge retreated 0.3 percent to 1,401.60 by 10:58 a.m. in Moscow. Preferred shares of oil producer Surgutneftegas, which trades without the right to receive a dividend today, lost as much as 6 percent, according to data compiled by Bloomberg.
Crude oil, Russia’s chief export earner, slipped for the fifth day in New York, trading down 0.2 percent at $94.05 a barrel. Russia receives about half of its budget revenue from oil and natural gas sales. Bank Rossii will hold the refinancing rate at 8.25 percent for an eighth month at a meeting in Moscow today, according to 18 of 24 economists in a Bloomberg survey.
“Dividend declaration and ex-dates are mostly dragging the market down,” Bruce Bower, a partner at Verno Capital in Moscow, which manages about $200 million, said by phone. “Oil has been dropping lately.”
Investors had to own Surgut stock before today to receive the dividend payout, which traders deduct from the company’s share price on the ex-dividend date.
Utilities added 0.8 percent on average. OAO Russian Grids, formerly known as MRSK Holding, jumped 2.1 percent to 1.425 rubles. OAO Inter RAO UES rose 1.8 percent to 1.40 kopeks, while Federal Grid Co. increased 1.9 percent to 13.075 kopeks, the most on the Micex.
VTB Group, Russia’s second-biggest lender, retreated 2.7 percent to 4.48 kopeks. The stock rose 12 percent from April 29 -- when it announced investors agreed to buy all $3.3 billion of shares it’s selling to increase capital -- through May 8.
The pre-emptive rights offering for VTB’s local shares closes on May 17 and yesterday for its depositary receipts, Luis Saenz, the head of equity sales and trading at BCS Financial Group said in an e-mailed note on May 13.
OAO Mechel (MTLR), Russia’s biggest coking coal producer, declined 1.1 percent to 121.50 rubles. The American depositary receipts lost 5.5 percent to $3.81 yesterday. MSCI Inc. may cut the company’s depositary receipts from its Russia Index, according to an e-mailed note from VTB Capital on April 29.
MSCI will announce the results of its semi-annual index rebalancing for the Russia index today after the market closes, with changes scheduled to take effect on June 3.
The number of shares traded on the Micex was 1.8 times above the gauge’s 30-day average, while the index’s 10-day price swings subsided to 16.594, the lowest since April 23.
Russian equities have the cheapest valuations among 21 emerging markets tracked by Bloomberg. The Micex trades at 5.2 times its 12-month estimated earnings and has lost 5.2 percent this year, compared with a 10.5 multiple for the MSCI Emerging Markets Index, which has dropped 0.9 percent in the period.
The dollar-denominated RTS Index (RTSI$) fell 0.9 percent to 1,400.58. The RTS Volatility Index, which measures expected swings in stock futures, surged 2.2 percent to 21.05. The Bloomberg Russia-US Equity Index of the most-traded Russian companies in the U.S. slipped 0.2 percent to 94.35. The Market Vectors Russia ETF (RSX), the largest dedicated Russian exchange-traded fund, was steady at $27.30 in New York.
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