Russian equities tumbled, led by OAO Uralkali, as the world’s largest potash producer by output neared the end of a $1.6 billion share buyback.
The benchmark Micex Index (INDEXCF) retreated 0.3 percent to 1,413.67 by 12 p.m. in Moscow. Uralkali fell as much as 3.9 percent, trading down 2.7 percent at 193.50 rubles, the third day of declines. OAO Magnit, Russia’s biggest food retailer, slumped 2.4 percent to 8,055.10 rubles, while smaller rival OAO Dixy Group jumped 1.6 percent to 492.83 rubles.
Uralkali approved a one-year $1.6 billion share buyback program in November after the stock declined. The company has bought about $1.3 billion of shares to date, according to a July 22 statement. Dixy climbed after first-half revenue rose 23 percent from a year earlier. Magnit surged 5.8 percent yesterday and is the best performer on the Micex this year with a 67 percent advance, trading at 22 times estimated earnings, compared with 18 times for Dixy.
“Uralkali continues its slump because of the upcoming end to its buyback,” Vitaly Kupeev, an analyst at Allianz Investments in Moscow, said by phone. “Investors are selling Magnit and buying Dixy because it’s much cheaper and posted good results.”
China’s manufacturing contracted at a faster pace in July, signaling a deepening slowdown in the world’s second-largest economy, according to an initial purchasing managers index compiled by HSBC Holdings Plc and Markit Economics.
Crude oil, Russia’s main export earner, retreated 0.2 percent to $107.06 a barrel in New York. Russia receives about 50 percent of its budget revenue from oil and natural gas sales. Standard & Poor’s GSCI (SPGSCI) Index of commodities was little changed for the second day at 647.99. The dollar-denominated RTS Index lost 0.2 percent to 1,377.74.
OAO Mechel (MTLR), Russia’s biggest coking coal producer, added 4.4 percent to 102.10 rubles, the strongest advance on the Micex. The company said last month it plans to spend as much as $100 million on a yearlong share buyback to curb further declines in the stock which has plunged 50 percent this year.
The Micex climbed 1.7 percent last week on speculation the U.S. Federal Reserve will keep stimulus in place. Russia’s equities trade at the cheapest valuations based on estimated earnings among 21 emerging economies tracked by Bloomberg.
While Bank Rossii kept its main rates unchanged on July 12, it introduced a one-year floating-rate facility with a starting cost of 5.75 percent, compared with its 7.5 percent fixed-rate for similar-maturity loans. Russia’s economy grew 1.6 percent in the first three months, spurring calls for easing.
The volume of shares traded on the Micex was 19 percent below the 30-day average, data compiled by Bloomberg show, while 10-day price swings retreated to 16.05. The 50-member Micex’s 4.3 percent decline in 2013 compares with a 3 percent increase for India’s benchmark Sensex Index and Brazil’s Ibovespa Index’s (IBOV) 20 percent loss.
The 14-day relative strength index on the Micex subsided to 62 from 64 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 six stocks, or 72 percent, were trading above their 50-day moving average on the Micex yesterday. One closed at a 52-week low and one at a 52-week high, according to data compiled by Bloomberg. The Russian Volatility Index, which measures expected swings in RTS futures, dropped 0.4 percent, falling for a fourth day. The Bloomberg Russia-US Equity Index of the most-traded Russian companies in the U.S. climbed 0.6 percent to 93.09 yesterday.
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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