Micex Index Falls Second Day as JPMorgan Cuts Russia on Crude
Russian stocks declined for a second day as JPMorgan Chase & Co. reduced the nation’s equities to the equivalent of sell on declining crude prices.
The Micex slid 0.3 percent to 1,472.12 by 12:34 p.m. in Moscow. OAO Rosneft, Russia’s biggest oil producer, dropped 1.2 percent to 260.03 rubles. Steelmaker OAO Severstal declined 1 percent to 296.70 rubles.
JPMorgan reduced its weighting of Russian equities to underweight, citing a drop in the crude price as the risk of U.S. military action in Syria fades. Oil has averaged $105.93 a barrel in New York this quarter amid concern an attack may distrupt supplies, helping the benchmark index of the world’s biggest energy exporter gain 11 percent since June.
“We’ve seen the Micex gain a lot this quarter, we were expecting a slight correction, but valuations remain attractive,” Dmitri Kryukov, the chief investment officer at Verno Capital, said by phone from Moscow. “Oil has been declining for the past few days.”
Crude lost as much as 0.5 percent to $104.10 today. Polymetal International Plc, a Russian gold and silver miner, lost 2.5 percent to 339.57 rubles, a second day of declines.
OAO Moscow Exchange fell 2.9 percent to 61.20 rubles, the most on the index. Goldman Sachs Group Inc. removed the stock from its central and eastern Europe, Middle East and Africa focus list, according to a note today.
Moscow Exchange shareholders will vote at a Nov. 14 extraordinary meeting in Moscow on whether to approve the buyback of a 4.2 percent stake, the bourse said in a statement on Sept. 19 after the market close. The exchange plans to buy the shares at 55 rubles apiece, allowing stockowners as of Sept. 25 to participate in the plan, it said. The company will buy the shares from its unit, OOO Micex (INDEXCF) Finance, after which it will cancel them, it said.
OAO Alrosa, the world’s biggest diamond miner by output, added 1.7 percent to 35.10 rubles, the biggest advancer. The company may sell a 14 percent stake in October, two people with direct knowledge of matter said on Sept. 17.
Average trading volume on the Micex was about 47 percent below the 30-day average today, data compiled by Bloomberg show. Ten-day price swings climbed to 15.864. The dollar-denominated RTS Index dropped 0.8 percent to 1,451.94. The gauge closed 19.9 percent above this year’s low on June 24, 0.9 index point short of a bull market, after the U.S. Federal Reserve unexpectedly decided against reducing monetary stimulus.
Even after last week’s 2.5 percent rally, Russian equities have the cheapest valuations among 21 emerging economies tracked by Bloomberg. The Micex Index’s 12-month estimated price-to-earnings ratio was at 4.3 today, compared with a multiple of 10.7 for the MSCI Emerging Markets Index.
The Bloomberg Russia-US Equity Index of the most-traded Russian stocks in New York tumbled 1.5 percent on Sept. 23, while the Market Vectors Russia ETF (RSX), the largest dedicated Russian exchange-traded fund, dropped 1.6 percent. The ruble weakened 0.2 percent to 31.9265 against the dollar today.
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