Russia Micex Index Trims Year’s Gains as Crude Trades Lower

Russian stocks fell, paring this year’s advance amid record outflows from equity funds and a retreat in the oil price.

The Micex Index (INDEXCF) slid 0.1 percent to 1,506 at 1:09 p.m. in Moscow, trimming a 2.1 percent gain in the year and 1.8 percent increase this month. OAO Phosagro dropped 1.2 percent to 979.90 rubles, while OAO Mechel (MTLR), the nation’s biggest coking coal producer, added 1.2 percent to 69.30 rubles.

Crude oil dropped as much as 0.4 percent in New York before trading little changed at $98.87 a barrel. Russia receives about half of its budget revenue from oil and natural gas sales. Redemptions from Russia-dedicated equity funds reached $3.59 billion in 2013 through Dec. 18, the most since EPFR Global started tracking flows in 1996, the Boston-based research firm said by e-mail on Dec. 20.

“Pessimists have left Russia at this point, we’ve seen large redemptions from equity funds,” 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 traditionally doesn’t do much prior to the holidays as people have already made most of the changes to their portfolios.”

Trading halts on Dec. 31 until Jan. 6 for the New Year’s break. The bourse will also be closed on Jan. 7 for Russian Orthodox Christmas.

Russian stocks gained this month after President Vladimir Putin pardoned imprisoned former Yukos Oil Co. owner Mikhail Khodorkovsky. Two members of the Pussy Riot punk group were also freed yesterday under an amnesty signed by Putin.

The dollar-denominated RTS Index (RTSI$) was little changed at 1,452.78. Russian equities have the cheapest valuations among 21 emerging-market economies monitored by Bloomberg, with shares on the benchmark trading at 4.5 times projected 12-month earnings compared with a multiple of 10.4 for the MSCI Emerging Markets Index.

To contact the reporter on this story: Ksenia Galouchko in Moscow at kgalouchko1@bloomberg.net

To contact the editor responsible for this story: Wojciech Moskwa at wmoskwa@bloomberg.net

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