Russian equities fell to a five-week low, extending a fourth-straight monthly drop as crude oil tumbled and the nation’s biggest lenders declined.
The Micex Index (INDEXCF) retreated 0.8 percent to 1,350.48 by 11:41 a.m. in Moscow, poised for a 2.5 percent drop in the month. Financial stocks led the declines among industry groups along with utilities, losing 1.2 percent on average.
Crude, Russia’s main export earner, declined 0.8 percent to $92.90 a barrel in New York, heading for a third weekly decline after U.S. stockpiles climbed to the most in more than 80 years. OAO Sberbank, the nation’s biggest lender, tumbled 1.1 percent to 98.82 rubles, while VTB Group dropped 1.7 percent to 4.48 kopeks. Russia’s economy will probably expand 2.3 percent in the second quarter, according to the median estimate of 9 economists in a Bloomberg survey. That’s less than the forecast of 2.5 percent a month earlier.
“There’s Russia fatigue in the market,” Bruce Bower, a partner at Verno Capital in Moscow, which manages about $200 million in assets, said by phone. “Commodity prices have come down, which presents a risk for Russia.”
Total fund outflows from Russia in the week ending May 29 reached $267 million, compared with $652 million from Brazil, Sberbank CIB said in an e-mailed note today.
The nation’s economy grew at the weakest pace since 2009 in the first quarter as the euro area’s longest recession hurt demand for commodity exports, federal data showed on May 17. Russia’s central bank kept its main interest rates on hold for an eighth month in May.
President Vladimir Putin “has asked for stimulus measures and I think we’ll see a move soon,” Verno’s Bower said. “In the second half of the year we should see a rate cut.”
The Micex tumbled the most in a year on May 23, the day after U.S. Federal Reserve Chairman Ben S. Bernanke said the central bank could reduce the pace of its asset purchases if officials see signs of sustained improvement in growth. The Fed buys $85 billion of debt a month to support the economy by putting downward pressure on interest rates.
OAO Moscow Exchange, Russia’s biggest bourse, increased 0.6 percent to 53.80 rubles after first-quarter net income rose 21 percent to 2.56 billion rubles. The stock is poised for a 20 percent advance in the month, the most on the Micex.
The volume of shares traded on the Micex was 31 percent below the 30-day average, while 10-day price swings subsided to 29.35.
Russian equities have the cheapest valuations among 21 emerging markets tracked by Bloomberg. The Micex trades at 5.1 times its 12-month estimated earnings and has lost 7.1 percent this year, compared with a 10.3 multiple for the MSCI Emerging Markets Index, which has dropped 4 percent in the period.
The dollar-denominated RTS Index (RTSI$) added 0.6 percent to 1,359.11. The Russian Volatility Index tumbled 2.5 percent to 24.74. The Bloomberg Russia-US Equity Index of the most-traded Russian companies in the U.S. rose 0.2 percent to 89.82 yesterday.
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