Russia Stocks Slump Most in Emerging Markets as Rally Overdone
Russian stocks fell the most among emerging markets as sliding crude oil pared appetite for shares in the world’s biggest energy exporter and a technical indicator showed gains this month were overdone.
The benchmark Micex Index (INDEXCF) lost 1.3 percent to 1,511.73 by 2:32 p.m. in Moscow, the most since Aug. 15 on a closing basis. OAO Severstal, Russia’s second-largest steelmaker, dropped 1.2 percent to 295 rubles. OAO Gazprom, the natural-gas export monopoly, declined 1.4 percent to 155.75 rubles. OAO Surgutneftegas, a Russian oil producer, tumbled 2.4 percent.
The 14-day relative strength index on the Micex was at 70.3 yesterday, above the level of 70 that suggests to some analysts a security has been overbought and is poised for a decline. U.S. President Barack Obama signed into law a measure ending the 16-day U.S. government shutdown and extending the nation’s borrowing authority until early next year. The Micex advanced 3.4 percent this month amid optimism a deal would be struck. Crude fell 0.6 percent to $101.73 a barrel in New York.
“Many investors expected the U.S. government to come to a resolution and hence were buying riskier assets, like Russia,” Vadim Bit-Avragim, who helps manage about $4.4 billion at Kapital Asset Management in Moscow, said by phone. “And once the decision was made, many decided to fix profits after the rally. At the same time, the U.S. agreement will have to be revisited soon, which creates uncertainty. We may see an extended drop in the oil price now.”
Severstal sank 0.8 percent to $9.185 in London after reporting total steel-product sales in the third quarter fell 4 percent from the previous three-month period.
Surgutneftegas tumbled 1.9 percent to $9.03 in London while Gazprom dropped 1.1 percent to $9.695. The RTS Index (RTSI$) declined 0.9 percent to 1,486.28. The dollar-denominated gauge rose 20 percent from this year’s low to enter a bull market on Oct. 10.
Russian equities have the cheapest valuations among 21 emerging economies monitored by Bloomberg, with shares on the index trading at 4.4 times projected 12-month earnings, compared with a multiple of 10.7 for the MSCI Emerging Markets Index. Ten-day price swings on the Micex rose to 15.255 from 12.567 yesterday.
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