Russian equities fell from an eight-month high as crude oil slipped below $100 a barrel for the first time since July and OAO Gazprom retreated.
The Micex Index (INDEXCF) lost 0.3 percent to 1,529.36 by 2:06 p.m. in Moscow, paring its gain from this year’s low in June to 19.3 percent. Gazprom, the natural-gas export monopoly, declined 1 percent to 155.47 rubles and lost 1.1 percent to $9.705 in London. Preferred shares of oil producer OAO Surgutneftegas decreased 0.9 percent to 24.549 rubles.
Crude, Russia’s main export earner, slid 1 percent to $99.80 in New York. Gazprom has advanced 8 percent this month and the stock, which has the biggest weighting on the Micex, is trading up 45 percent from a June 24 low.
“Gazprom had been one of the best-performing stocks, today some players are fixing profits,” Mansur Mammadov, a portfolio manager at Kazimir Partners, which oversees $300 million in assets, said in a phone interview from Moscow. “Although oil is still at comfortable levels for Russia, we don’t expect strong growth going forward.”
Russia’s economic expansion won’t exceed 2 percent this year, Prime Minister Dmitry Medvedev said today. The Economy Ministry in August cut its growth forecast for the year to 1.8 percent from 2.4 percent.
Utilities climbed the most among industry groups, rising 1.6 percent on average. OAO RusHydro added 1.9 percent to 57.31 kopeks and 2.1 percent to $1.746 in London. OAO Russian Grids gained 4.9 percent to 89.6 kopeks.
The Micex rallied 1.3 percent last week after President Barack Obama signed into law a measure ending the 16-day government shutdown and extending the nation’s borrowing authority until early next year. The Federal Reserve will delay the first reduction in its bond purchases until March after the government shutdown slowed fourth-quarter growth and interrupted the flow of data, according to a Bloomberg survey.
“The cost of funding is becoming the most important issue for the markets,” Aleksei Belkin, who helps manage about $4.4 billion in assets as chief investment officer at Kapital Asset Management LLC in Moscow, said by phone. “The market is playing with the idea that the less clarity we see with the U.S. budget, the more the stimulus tapering will be pushed back.”
OAO Novatek added as much as 1.7 percent, rising 0.6 percent to 409.50 rubles. President Vladimir Putin signed a decree that would allow Russia’s second-biggest gas producer to pay no extraction tax and export duty on Gydan peninsula natural gas if it’s transported to a liquiefied natural gas plant in Yamal, according to a Kremlin website statement dated Oct. 15.
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 10.8 for the MSCI Emerging Markets Index. Ten-day price swings on the Micex dropped to 14.53 from 16.29 on Oct. 18.
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