Russian shares dropped, curbing this year’s advance, as OAO Mechel to OAO Gazprom retreated on bets gains this month were overdone.
The Micex Index (INDEXCF) lost 0.4 percent to 1,501.12 by the close in Moscow, trimming the 2013 increase to 1.8 percent and the advance in December to 1.5 percent. Mechel, the nation’s biggest coking coal producer, which has slumped 67 percent this year, fell 2 percent to 67.90 rubles. Gazprom decreased 0.6 percent to 140.80 rubles.
The Micex reversed some gains it’s made since the Federal Reserve announced plans on Dec. 18 to cut its monthly bond purchases by $10 billion to $75 billion, citing an improved outlook for the U.S. employment market. Stocks were also boosted by President Vladimir Putin’s decision to pardon imprisoned former Yukos Oil Co. owner Mikhail Khodorkovsky last week. U.S. and most global markets are closed for the holidays today.
“Investors are taking profits from this month’s gains,” Sergey Vakhrameev, an analyst in Moscow at AnkorInvest LLC, which manages about $30 million in assets, said by phone. “The U.S. markets are closed for Christmas today and there’s less impact from Western players on the Russian market.”
The Moscow bourse will shut from Dec. 31 to Jan. 6 to mark the New Year holiday, and on Jan. 7 for Russian Orthodox Christmas.
OAO Aeroflot, the nation’s biggest airline, added as much as 5.2 percent, before closing 1.2 percent higher at 85.10 rubles, the strongest since June 2008. The stock is the Micex’s second-best performer after OAO Magnit this year after surging 90 percent. Aeroflot aims to sell as much as 10 percent of its stock next year in a push to boost the volume traded on the Moscow Exchange, Chief Executive Officer Vitaly Savelyev said in an interview on Dec. 3.
“We’ll most likely end the year with a gain,” Oleg Popov, who manages $1 billion of securities for Allianz Investments, said by phone from Moscow. “The main trigger for market growth has been the Fed decision to start tapering as investors were encouraged by the growth in the U.S. economy.”
Redemptions from Russia-dedicated equity funds reached $3.59 billion in 2013 through Dec. 18, the most since EPFR Global started tracking flows in 1996, the Boston-based research firm said by e-mail on Dec. 20. The dollar-denominated RTS Index (RTSI$) declined 0.5 percent to 1,447.50. 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 10.5 for the MSCI Emerging Markets Index.
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