Russian equities fell for the first time in five days as crude oil tumbled and disappointing Chinese manufacturing data spurred declines in metal producers. Price swings on the benchmark gauge surged.
The Micex Index (INDEXCF) decreased 2.2 percent to 1,416.13 by 10:36 a.m. in Moscow, a 9.4 percent drop from this year’s high and poised for the biggest retreat since Nov. 13. The volume of shares traded was 96 percent above the measure’s 30-day average, while 10-day price swings jumped to 23.844, the highest since Sept. 26.
OAO Mechel (MTLR), OAO Severstal and OAO Novolipetsk Steel fell at least 3 percent as manufacturing in China unexpectedly contracted for the first time in seven months, a report from HSBC Holdings Plc and Markit Economics showed. Crude, Russia’s main export earner, declined 1.2 percent to $93.17 a barrel in New York. Russia receives about half of its budget revenue from oil and natural gas. The Standard & Poor’s GSCI Commodities (SPGSCI) Index dropped 0.8 percent to 620.69, dropping for the third day.
“It will be difficult for emerging market equities to attract new investor funds if the largest EM economy continues to slow ahead of expectations,” Slava Smolyaninov, a Moscow-based analyst at UralSib Capital, said in an e-mailed note today. “Commodities are also taking a hit. That sets a very cautious backdrop for the Russian ruble and equities.”
VTB Group dropped 3.7 percent to 4.79 kopeks after it sold 102.5 billion rubles ($3.3 billion) of shares on the Moscow Exchange in an offering that closed yesterday. China Construction Bank bought $100 million VTB shares in the placement, RIA Novosti reported yesterday, citing an unidentified person. Norges Bank Investment Management was the biggest investor in VTB’s sale, according to RIA.
Utilities led the declines among nine industry groups on the Micex, losing 3.7 percent on average.
Open interest on RTS stock futures climbed to the highest level in eight months yesterday. Volumes surged amid comments from Federal Reserve Chairman Ben S. Bernanke that raising interest rates or reducing asset purchases too soon would endanger the U.S. recovery. The number of contracts that have yet to be closed, liquidated or delivered on Moscow’s dollar-denominated RTS index (RTSI$) exceeded 1 million this week, the highest level since September, data compiled by Bloomberg show.
Russia’s 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 4 percent this year, compared with a 10.5 multiple for the MSCI Emerging Markets Index, which has dropped 2.7 percent in the period.
The dollar-denominated RTS Index fell 3.1 percent to 1,416.67. The RTS Volatility Index, which measures expected swings in stock futures, rose 7.6 percent to 21.85 today, poised for the highest since April 23. The Bloomberg Russia-US Equity Index of the most-traded Russian companies in the U.S. declined 1.2 percent to 94.51 yesterday.
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