Russia Stocks Drop on Magnit Report as Norilsk Falls on Output

Russian equities dropped as OAO Magnit tumbled on concern the nation’s biggest food retailer may be forced to close stores in Moscow.

The benchmark Micex Index (INDEXCF) lost 0.2 percent to 1,400.05 by 1:12 p.m. in Moscow after a 1.3 percent decline last week. Magnit fell 2 percent to 8,030.50 rubles in Moscow and slid 2.7 percent to $58.35 in London. OAO GMK Norilsk Nickel, the world’s biggest producer of the metal, sank 0.9 percent to 4,569 rubles.

Magnit retreated as much as 3 percent after the Vedomosti newspaper reported Moscow mayor Sergei Sobyanin called for health inspectors, police and the migration service to check the company’s Moscow stores and “take measures to close them.” Nickel production in the second quarter fell 5 percent from a quarter earlier, Norilsk said today.

“The market doesn’t like probes,” Ivan Kushch, an analyst at VTB Capital in Moscow, said by phone. “Although there would be little financial impact for Magnit from the Moscow store closures, this creates negative sentiment.”

A Magnit spokesman, who declined to be identified, citing company policy, declined to comment on the report. The company is the best performer on the Micex with a 66 percent gain this year and has the fourth-biggest weighting at 6.1 percent.

OAO Uralkali, the world’s largest potash producer, slumped 1.8 percent to 186.02 rubles, poised for the lowest since December 2010.

Billionaire Sells

Billionaire Alexander Nesis sold shares in Uralkali on July 26 two weeks after the company bought out fellow shareholder Zelimkhan Mutsoev for $1.3 billion. The shares were sold “in several small stakes on and off the market, with buyers representing several portfolio investors,” Uralkali said in the statement.

The dollar-denominated RTS Index (RTSI$) was little changed at 1,347.75. Russia’s equities trade at the cheapest valuations based on estimated earnings among 21 emerging economies tracked by Bloomberg.

Russia’s central bank is accepting non-marketable assets as collateral for one-year loans today for the first time and the country’s biggest lenders are set to take all 500 billion rubles ($15.3 billion) offered, according to OAO Rosbank and VTB Capital.

Russia’s economy grew 1.6 percent in the first three months, spurring calls for easing. Bank Rossii kept its main lending rates unchanged for a 10th month as policy makers wait for inflation to drop within the target range of 5 percent to 6 percent.

Volume Drops

The volume of shares traded on the Micex was 44 percent below the 30-day average, data compiled by Bloomberg show, while 10-day price swings fell to 12.01. The 50-member Micex’s 5.1 percent decline in 2013 compares with a 1 percent increase for India’s benchmark Sensex Index and a 19 percent loss for Brazil’s Ibovespa Index. (IBOV)

The 14-day relative strength index on the Micex subsided to 57.4 from 58.6 on July 26. 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.

The Russian Volatility Index, which measures expected swings in RTS futures, surged 7.9 percent, the first advance after six days of declines. The Bloomberg Russia-US Equity Index of the most-traded Russian companies in the U.S. decreased 0.5 percent to 91.16 on July 26, the third day of declines.

The Micex trades at 5.3 times its 12-month estimated earnings, compared with a multiple of 10 for the MSCI Emerging Markets Index.

To contact the reporter on this story: Ksenia Galouchko in Moscow at kgalouchko1@bloomberg.net

To contact the editor responsible for this story: Wojciech Moskwa at wmoskwa@bloomberg.net

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.