Russian shares dropped to the weakest level in more than a year as metal producers slumped to 2009 lows on concern global growth may falter.
The Micex Index (INDEXCF) declined 1.6 percent to 1,281.13 by 10:46 a.m. in Moscow, the lowest intraday level since June 4, 2012. OAO GMK Norilsk Nickel, the world’s biggest producer of the metal, fell 3.4 percent to 4,317 rubles, the lowest since December 2009. OAO Novolipetsk Steel retreated 3.5 percent to 40.46 rubles, the lowest since March 2009.
Stocks slumped and oil declined as the World Bank cut its global growth forecast amid concern central banks may pare monetary stimulus. The U.S. Federal Open Market Committee meets next week after the Bank of Japan this week left its lending program unchanged.
“The forecast cut is contributing to the selloff today,” Stanislav Kopylov, who helps manage about $3 billion at UralSib Asset Management in Moscow, said by phone today.
The dollar-denominated RTS Index (RTSI$), which last week entered a bear market, declined 1.3 percent to 1,246.88. On the Micex, 5 stocks increased while 43 dropped and two were unchanged. The volume of shares traded on the gauge was 28 percent below the 30-day average, while 10-day price swings rose to 20.581.
Bank Rossii held its refinancing rate at 8.25 percent, the regulator said in a statement on its website on June 10. That matched the median estimate in a Bloomberg survey of 26 economists, with four predicting a quarter percentage point cut. Inflation in Russia accelerated for a second month in May to the fastest pace in 21 months, according to data last week.
The rates decision means that completing an easing cycle Bank Rossii Chairman Sergey Ignatiev announced in April will fall to his successor, Kremlin economic aide Elvira Nabiullina, who takes over June 24. The Economy Ministry lowered this year’s growth forecast to 2.4 percent from 3.6 percent in April.
The world economy will expand 2.2 percent, less than a January forecast for 2.4 percent growth and slower than last year’s 2.3 percent, the World Bank said in a report released yesterday in Washington. It lowered its prediction for developing economies and sees the euro region’s gross domestic product shrinking 0.6 percent.
The Micex tumbled the most in a year on May 23, the day after Federal Reserve Chairman Ben S. Bernanke suggested the central bank could curtail its bond buying if the job market improves in a “real and sustainable way.” The Fed buys $85 billion of debt a month to support the economy by putting downward pressure on interest rates.
President Vladimir Putin on June 11 ordered the government to make proposals for lower tariff increases by June 19. OAO Russian Grids dropped 3.7 percent to 1.004 rubles today, while its subsidiary Federal Grid Co. retreated 2.3 percent to 9.86 kopeks.
Crude, which together with natural gas contributes about 50 percent of Russia’s budget revenue, traded down 0.4 percent at $95.46 a barrel. Brent for July settlement fell 0.2 percent to $103.24 a barrel on the London-based ICE Futures Europe exchange, the second day of declines. Urals crude, Russia’s major export blend, added 1.1 percent to $102.74.
The 14-day Relative Strength Index on the Micex fell to 31 from 34 on June 11. A level below 30 suggests to some analysts the shares are oversold and poised for a rebound.
The country’s equities have the cheapest valuations among 21 emerging markets tracked by Bloomberg. The Micex trades at 4.8 times its 12-month estimated earnings, having lost 13 percent this year, compared with a multiple of 9.7 for the MSCI Emerging Markets Index, which is down 11 percent.
The Russian Volatility Index advanced 7 percent to 31.84. The Bloomberg Russia-US Equity Index of the most-traded Russian companies in the U.S. fell 0.3 percent to 83.95 yesterday.
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