Russian stocks snapped the longest streak of gains since 2010 as a technical indicator showed the benchmark gauge may be overbought and power companies sank.
The Micex Index (INDEXCF) lost 0.2 percent to 1,452.00 by 12:02 p.m. in Moscow, its first decline in nine days. The gauge’s 14-day Relative Strength Index rose to 70.8 yesterday, the highest since Jan. 28, signaling a possible drop. OAO Russian Grids tumbled 2.9 percent to 1.043 rubles, while Federal Grid Co. retreated 1.9 percent to 10.71 kopeks. Utility-company shares declined 1.5 percent on average.
The Economy Ministry, which is seeking ways to curb consumer-price growth and spur expansion, has proposed freezing utilities’ prices next year. President Vladimir Putin supported the measure at a budget meeting yesterday, Economy Minister Alexei Ulyukayev told reporters. Crude oil, Russia’s main export earner, retreated 0.1 percent to $107.43 a barrel in New York.
“The market is overbought, investors expect stocks to roll back today,” Andrey Vashevnik, chief investment officer for Russian markets at R&B Russia Investment Fund Ltd, said by phone. “The lack of clarity on what’s going to happen to utilities’ tariffs is causing the stocks to fall.”
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 retreat. The Micex surged 4.3 percent last week, the most since December 2011.
VTB Group retreated 0.8 percent to 4.43 kopeks. Russia’s second-biggest lender posted net income in the second quarter of 12.6 billion rubles ($385 million), compared with an average analyst estimate for 15.4 billion rubles, according to a Bloomberg survey.
OAO Mechel (MTLR), Russia’s largest producer of coal for steelmakers, advanced 3.2 percent to 115.10 rubles, the highest intraday level since May 29 and the biggest gain by percentage points on the Micex.
OAO Rostelecom, Russia’s state-run phone company, increased 2.1 percent to 110.46 rubles. Deutsche Bank AG and the Russian Direct Investment Fund may jointly pay $241 million to buy 2.45 percent of the company, Kommersant reported today, citing a person it didn’t identify with knowledge of the deal.
Russia’s central bank will keep the refinancing rate unchanged at 8.25 percent at a meeting in Moscow tomorrow, according to 14 out of 22 economists in a Bloomberg survey. Eight forecast a cut to 8 percent. The main lending and deposit rates will also stay unchanged, two separate surveys show.
Russia’s economy expanded 1.2 percent in the second quarter, the Federal Statistics Service reported on Aug. 9, missing the median forecast for 2 percent. The central bank refrained from cutting interest rates for an 11th month on Aug. 9, while highlighting “significant” risks to growth.
Russian equities have the cheapest valuations among 21 emerging economies tracked by Bloomberg, with shares trading at 3.8 times 12-month estimated earnings, compared with a multiple of 10.5 for the MSCI Emerging Markets Index.
The volume of shares traded on the Micex was 27 percent above the 30-day average, while 10-day price swings subsided to 18.959.
The dollar-denominated RTS Index added 0.3 percent at 1,398.64. The Bloomberg Russia-US Equity Index of the most-traded Russian stocks in New York rose 0.5 percent yesterday, while the Market Vectors Russia ETF (RSX), the largest dedicated Russian exchange-traded fund, gained 0.6 percent.
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