Russian stocks retreated from a six-month high after oil sank and metal producers fell as investors await signals from the U.S. Federal Reserve on stimulus.
The Micex Index dropped 0.2 percent to 1,467.83 by 1:01 p.m. in Moscow after surging 2.1 percent yesterday to the highest since March 15. OAO Mechel (MTLR), Russia’s biggest producer of coal for steelmakers, lost 1.4 percent to 110.40 rubles. OAO Severstal, the country’s second-largest steelmaker, declined 0.7 percent to 296.10 rubles and dropped 0.9 percent to $9.175 in London.
Crude oil, Russia’s main export earner, traded down 0.5 percent to $106.08 in New York, the third day of declines, as a U.S. agreement with Russia on Syria’s chemical weapons eased the threat of a U.S. strike. The Federal Reserve starts a two-day policy meeting today, with economists predicting the central bank will trim its monthly bond-buying program by $10 billion to $75 billion.
“Metal stocks are some of the most sensitive to global factors on the Russian market,” Kirill Chuyko, head of equity research at BCS Financial Group in Moscow, said by phone. “The Russian market is very sensitive to the oil price, crude is falling today.”
The Micex Index (INDEXCF) advanced an average 77 percent during the Federal Reserve’s first two rounds of bond buying, and fell 0.6 percent in periods of no stimulus, the biggest difference of 46 emerging and developed markets tracked by Bloomberg. Fifty-seven percent of investors surveyed in a Bloomberg Global Poll say they don’t expect a sudden change in the markets if the Fed cuts its bond purchases because they already anticipate tapering action.
Citigroup Inc. and Barclays Plc cut the Russian steel sector to neutral, according to e-mailed notes today. Barclays reduced Evraz Plc, OAO Novolipetsk Steel and Polymetal International Plc to the equivalent of sell and lowered its recommendation on the mining sector to negative, citing rich valuations and weak fundamentals.
The Micex fell 0.7 percent on Sept. 13 as Russia’s central bank kept the refinancing rate unchanged at 8.25 percent, matching the forecast of 14 out of 22 economists in a Bloomberg survey. 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.
OAO Sberbank, the nation’s biggest lender, lost as much as 1.1 percent, trading down 0.5 percent at 98.54 rubles. Sberbank accounted for about 45 percent of retail deposits in Russia as of April 1.
OAO Uralkali dropped 1.6 percent to 186.12 rubles and tumbled 2.1 percent to $28.73 in London. The potash producer surged to the highest since July yesterday as Russian entrepreneur Vladimir Kogan was said to be seeking a stake.
Russian equities have the cheapest valuations among 21 emerging economies tracked by Bloomberg, with shares trading at 4.4 times 12-month estimated earnings, compared with a multiple of 10.6 for the MSCI Emerging Markets Index.
The volume of shares traded on the Micex was 20 percent below the 30-day average, while 10-day price swings rose to 22.203.
The dollar-denominated RTS Index retreated 0.6 percent to 1,427.95, after jumping to the highest since May 22 yesterday. The Bloomberg Russia-US Equity Index of the most-traded Russian stocks in New York rose 1.3 percent yesterday, the highest since May 8, while Market Vectors Russia ETF (RSX), the largest dedicated Russian exchange-traded fund, added 1.6 percent.
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