Russian equities fell as OAO Pharmstandard sank after the country’s biggest pharmaceutical company offered to buy out investors at a discount.
The benchmark Micex Index (INDEXCF) dropped 0.5 percent to 1,342.64 by 3:31 p.m. in Moscow after rising as much as 0.5 percent earlier. The dollar-denominated RTS Index (RTSI$) added 0.5 percent to 1,283.40. The volume of shares traded on the Micex was 43 percent below the 30-day average and ten-day price swings fell to 12.175.
Pharmstandard will offer to buy out shareholders who don’t vote for the planned spin-off of its over-the-counter unit for 2,180 rubles a share, equivalent to about $16.50 per global depositary receipt, at a Sept. 27 meeting, the company said yesterday. That was an 18 percent discount to yesterday’s closing price in London. Crude oil, Russia’s chief export, traded 0.1 percent lower at $103.01.
“Pharmstandard has set such a low buyout price that investors were forced to start selling shares,” Ksenia Arutyunova, an analyst at Rye, Man & Gor Securities, said by phone from Moscow.
Twenty nine stocks fell on the benchmark today, while 21 advanced. Russian equities have the cheapest valuations among 21 emerging markets tracked by Bloomberg.
Pharmstandard tumbled 9.5 percent, the biggest drop since November 2008 on a closing basis, to 2,020 rubles. The GDRs lost 15 percent in London. OAO Rostelecom’s preferred shares surged 2.1 percent to 74.88 rubles, the biggest increase on a percentage basis on the Micex today.
The Micex slid 2 percent on June 20 after comments by Fed Chairman Ben S. Bernanke that the central bank may wind down its bond buying if the U.S. economy performs in line with projections. The gauge climbed to a five-week high on July 4 as European Central Bank President Mario Draghi pledged to keep interest rates low. Europe is Russia’s biggest trade partner.
Russia’s economy grew 1.6 percent in the first three months, the slowest pace since 2009. Bank Rossii held its refinancing rate at 8.25 percent last month. The overnight repo rate will be held at 5.5 percent when the central bank next meets on July 12, according to the median estimate of 20 economists surveyed by Bloomberg. Seven predict a cut of 25 basis points.
Brent oil fell 0.2 percent to $107.25 a barrel in London and Standard & Poor’s GSCI Index (SPGSCI) of commodities also declined 0.2 percent. Urals crude was little changed at $107.51.
The Russian Volatility Index, which measures expected swings in RTS futures, slumped 2.1 percent. The Bloomberg Russia-US Equity Index of the most-traded Russian companies in the U.S. added 0.6 percent to 85.30 yesterday.
The Micex trades at 5.1 times its 12-month estimated earnings, compared with a multiple of 9.6 for the MSCI Emerging Markets Index.
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