Russian shares retreated, paring their fourth weekly advance, as OAO Russian Grids slumped on concern the state company may buy Moscow’s power-grid assets.
The benchmark Micex Index (INDEXCF) declined 0.3 percent to 1,412.44 by 11:58 a.m. in Moscow. The dollar-denominated RTS Index (RTSI$) retreated 0.4 percent to 1,371.51. Russian Grids sank 2.6 percent to 1.224 rubles, the biggest decline on the gauge. The stock is down 37 percent this year.
Russian equities fell the most in a month yesterday after a court sentenced Alexey Navalny, a leading opponent of President Vladimir Putin, to five years in prison. Navalny was released today while he appeals the ruling. Moscow’s government plans to consolidate power-grid assets and sell them to Russian Grids, formerly known as MRSK Holding before its merger with Federal Grid Co., either for cash or for a stake in the merged company, Kommersant reported.
“For Russian Grids, there is the risk of cash proceeds from privatizing regional MRSKs being reinvested, instead of paying dividends,” VTB Capital analysts said in an e-mailed note.
The Micex climbed earlier this week after U.S. Federal Reserve Chairman Ben S. Bernanke said on July 17 the central bank’s asset purchases “are by no means on a preset course” and could be reduced more quickly or expanded as economic conditions warrant.
OAO Raspadskaya, a coal producer, dropped 1.4 percent to 34.23 rubles. The stock was cut to the equivalent of sell by analysts at JPMorgan Chase & Co. today, who cited weaker volume and the price outlook.
Russian equities trade at the cheapest valuations based on estimated earnings among 21 emerging economies tracked by Bloomberg. The country is ranked the most corrupt nation among the Group of 20 advanced economies in Berlin-based Transparency International’s 2012 Corruption Perceptions Index.
Navalny, a lawyer and blogger who’s campaigned to expose fraud and waste at state companies and corruption by officials, is the most prominent opponent of Putin to face prison since former Yukos Oil Co. owner Mikhail Khodorkovsky, once Russia’s richest man.
Several thousand protesters gathered yesterday for an unsanctioned rally in support of Navalny near the Kremlin. Police detained some demonstrators and blocked off streets amid shouts of “Freedom to political prisoners.”
Crude oil, Russia’s main export earner, declined 0.2 percent to $107.88 a barrel in New York, trading near the highest price in 16 months. Russia receives about 50 percent of its budget revenue from oil and natural gas sales.
The volume of shares traded was 1.4 percent below the 30-day average, data compiled by Bloomberg show, while 10-day price swings rose to 20.818, the most since June 26. The 50-member Micex’s 4 percent decline in 2013 compares with a 4 percent increase for India’s benchmark Sensex Index and Brazil’s Ibovespa Index’s (IBOV) 22 percent loss.
The 14-day relative strength index on the Micex retreated to 64 from 65 yesterday. The RSI measures how rapidly prices have advanced or dropped during a specified time period. Readings below 30 indicate a security may be poised to rise, while those above 70 signal a potential drop.
Thirty seven stocks, or 74 percent, were trading above their 50-day moving average on the Micex yesterday. None closed at a 52-week low or at a 52-week high, according to data compiled by Bloomberg. The Russian Volatility Index, which measures expected swings in RTS futures, dropped 0.3 percent today, the first day in three. The Bloomberg Russia-US Equity Index of the most-traded Russian companies in the U.S. fell 1.4 percent to 92.02.
The Micex trades at 5.3 times its 12-month estimated earnings, compared with a multiple of 10 for the MSCI Emerging Markets Index.
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