Russian equities fell for the first time in four days as consumer stocks retreated on concern the nation’s economic slowdown will curb earnings.
The Micex Index (INDEXCF) dropped 0.3 percent in Moscow to 1,499.62 by 12:59 p.m. OAO Aeroflot, the country’s biggest airline, lost 5.1 percent to 77.31 rubles, the strongest percentage decline on the gauge. OAO Magnit, Russia’s largest retailer, traded 3.1 percent weaker at 8,125.20 rubles. OAO Dixy Group slid 3.1 percent to 365.79 rubles.
Consumer services shares led losses on the Micex with a 3 percent slump, on average. Russia’s economy grew 1.2 percent in the third quarter, trailing estimates, as a lack of investment kept the world’s largest energy exporter from reversing its worst slowdown since a 2009 recession. The country risks entering a period of entrenched economic stagnation, the Vedomosti newspaper said yesterday, citing an Economy Ministry report.
“The consumer theme was extremely popular among investors over the past few years, it has drained its potential for growth,” Aleksei Belkin, who helps manage about $4.5 billion in assets as chief investment officer at Kapital Asset Management LLC in Moscow, said by phone. “The big question right now is whether the economic stagnation will affect the consumer.”
Magnit dropped the most since October 2011 on Jan. 10 after the company said full-year retail sales growth slowed to 23 percent in December from 29 percent a month earlier. Magnit is scheduled to report 2013 results on Jan. 27.
Deutsche Bank AG analysts cut Magnit to hold, citing a weaker ruble and lower real disposable income. The ruble snapped seven days of losses against the dollar today, adding 0.1 percent to 33.90.
OAO M.video, Russia’s biggest electronics retailer, fell 2.4 percent to 253.15 rubles. Sales in 2013 rose 11 percent to 148.4 billion rubles ($4.38 billion) from a year earlier, missing the 155 billion ruble average estimate in a Bloomberg survey, the company said Jan. 17.
Aeroflot’s shares rallied 41 percent since November through Jan. 20 on speculation the company will benefit from Russia’s winter Olympics and as it plans to sell as much as 10 percent of its stock this year.
United Co. Rusal, the world’s largest aluminum producer, added 5.8 percent to 121.99 rubles, the biggest advancer on the Micex. Aluminum premiums are seen at record highs in the U.S. and Asia, researcher Harbor Intelligence said in a report dated Jan. 20. The outlook for the industry was raised to positive from neutral, according to a Jan. 16 note by Sanford C. Bernstein & Co. analysts.
OAO Gazprom extended yesterday’s gains, rising 1.9 percent to 148.42 rubles. Chief Executive Officer Alexey Miller plans to meet China National Petroleum Corp. Chairman Zhou Jiping in Beijing today, spokesman Sergei Kupriyanov said by phone yesterday. Gazprom traded 2.1 percent stronger at $8.77 in London.
Kupriyanov declined to say whether a gas-pricing agreement will be signed. Gazprom and CNPC are close to a pricing arrangement that will allow natural gas to arrive in eastern China at about $13 per million British thermal units, the Financial Times reported on Jan. 5, citing people it didn’t identify.
“The situation for Gazprom is getting better, the gas prices are higher, it may boost gas deliveries to Europe,” Kapital’s Belkin said. “There seems to be a trend in the market of selling consumer staples and buying gas.”
Gazprom may increase natural gas deliveries to the European Union and add as much as $2 billion to operating profit as the Netherlands cuts output at its biggest deposit, Sberbank CIB analysts said on Jan. 20.
The dollar-denominated RTS Index (RTSI$) was steady at 1,393.88, down 3.4 percent in 2014.
Russian equities have the cheapest valuations among 21 developing-nation economies monitored by Bloomberg, with shares on the benchmark Micex trading at 3 times projected 12-month earnings, compared with a multiple of 9.2 for the MSCI Emerging Markets Index.
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