Russia’s Anti-Terrorism Legislation Squelches Qiwi Rally

Qiwi Plc (QIWI), the Russian electronic-payment operator, dropped the most since its May listing in New York after newspaper Kommersant reported that a proposed anti-terrorism bill would limit transactions.

American depositary receipts of Qiwi, which had tripled since the company’s initial public offering, sank 17 percent to $45.02 yesterday. The Bloomberg Russia-US Equity Index of the most-traded Russian shares in the U.S. fell 0.2 percent to 98.94, led by CTC Media (CTCM) Inc. Russia’s Micex Index dropped 0.2 percent to 1,483.18 as of 1:55 p.m. in Moscow.

Russia may limit the amount that people can spend via online payment accounts without submitting personal data to 1,000 rubles ($29.97) a day as well as ban cross-border payments, according to the draft bill on the Duma website. President Vladimir Putin has called for increased security in the aftermath of the December Volgograd attacks that killed more than 30 people. Qiwi had rallied 217 percent since its share sale as demand grew for its 15 million virtual wallets and more than 167,000 kiosks across the country.

“When your utility bill is 3,000 rubles and your daily payment limit is set at 1,000 rubles, what do you do?” Anna Lepetukhina, a Moscow-based analyst at Sberbank CIB, an investment arm of OAO Sberbank, said by phone yesterday. She has a hold recommendation on Qiwi. “Will you consider finding a new way to pay?”

Anonymous accounts are the most widely used service for Qiwi, Yandex.Money, WebMoney and other e-payment services, Sberbank’s Lepetukhina said. If the current version of the draft law gets approval, it could reduce the revenue for Qiwi and other electronic-payment operators, she said.

Draft Law

The draft law was submitted yesterday to Sergei Naryshkin, speaker of the Duma, and released on its official website. The press service of the Duma, or lower house of the Russian parliament, wasn’t available for comments after regular business hours in Moscow yesterday.

“This is a warning sign for investors,” Yulia Bushueva, who helps manage about $500 million in assets at Arbat Investment Services Ltd. in Moscow, said by phone yesterday. “Investors used to turn a blind eye on the fact that Qiwi and other companies with huge multiples have certain political risks associated with them.”

Yandex NV (YNDX), which doubled last year, sank in November 2012 on concern a new law allowing Russia’s government to block access to websites will deter advertisers from the nation’s most-used search engine. Investors also punished Tinkoff Credit Systems in November, driving borrowing costs to an eight-month high and sinking its shares by as much as 47 percent, as lawmakers’ plans to restrict charge cards fueled concern the lender’s business model is at risk.

Net Income

“We’re hoping that the current version of the bill is preliminary and in the future members of the business community will be invited to participate in its update, and the final version will incorporate the possibility of different forms of distanced and simplified user identification,” Alexandra Vysochkina, Qiwi’s spokeswoman, said by e-mail yesterday.

Qiwi’s American depository shares dropped as much as 7.3 percent in Moscow today, trading down 2.8 percent at 1,585 rubles.

Qiwi will probably say next month that 2013 revenue declined 36 percent to $187.5 million, according to the average of six analysts’ estimates compiled by Bloomberg. Net income more than doubled to $60.6 million, the data showed.

The Market Vectors Russia ETF (RSX), the biggest U.S. exchange-traded fund that holds Russian shares, rose 0.5 percent to $27.59 yesterday. The RTS Volatility Index, which measures expected swings in the index futures, fell 4.5 percent to 20.03 today.

CTC Media, the only publicly-traded Russian television company, dropped 2.1 percent to $12.89.

To contact the reporters on this story: Halia Pavliva in New York at hpavliva@bloomberg.net; Elena Popina in New York at epopina@bloomberg.net

To contact the editor responsible for this story: Tal Barak Harif at tbarak@bloomberg.net

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