Russia’s benchmark stock gauge extended its worst start to the year since 2008, led by energy companies, as oil declined and a report showed Chinese non-manufacturing growth slowed.
The Micex Index (INDEXCF) dropped 0.3 percent to 1,450.53 by 2:44 p.m. in Moscow, taking this year’s decline to 3.6 percent. OAO Gazprom shares fell for a third day, sliding 1 percent to 143.63 rubles. OAO Rosneft, Russia’s largest oil producer, slumped 1.5 percent to 240.94 rubles. Brent crude slipped 0.4 percent after a 1.4 percent loss Jan. 31.
The Micex has dropped this year as Russia’s economy grew at less than half the previous year’s pace in 2013, falling short of economist forecasts. Emerging-market stocks have lost 6.9 percent in 2014 amid signs that the Chinese economy is slowing as the Federal Reserve pushes ahead with a reduction in stimulus. Crude is the nation’s chief export earner, while oil and gas sales provide about half of its budget revenue.
The ruble has slumped 6.5 percent against the dollar this year, the third-worst performer among 24 emerging-market currencies tracked by Bloomberg. The ruble slipped 0.1 percent against a basket of dollars and euros today, to 40.6767, approaching the all-time low 40.9038 reached Jan. 29. A weaker ruble encourages Russians to withdraw and convert local-currency deposits, while hurting retailers by making imports more expensive.
China’s non-manufacturing Purchasing Managers’ Index fell to 53.4 in January, the least since the gauge was created in March 2011, from 54.6 in December, adding to evidence that the world’s second-largest economy is slowing. A reading above 50 indicates expansion.
Fed policy makers reduced the pace of bond buying for a second straight meeting on Jan. 29. The Micex Index advanced an average 77 percent during the Fed’s first two rounds of debt purchases, and fell 0.6 percent in periods of no stimulus, the biggest difference of 46 emerging and developed markets tracked by Bloomberg.
OAO Magnit, Russia’s biggest retailer, rose 1.4 percent to 8,515.70 rubles. Lenta Ltd., the hypermarket chain controlled by U.S. leveraged buyout firm TPG Capital, said today it plans to sell shares in London, according to a regulatory filing. OAO Sberbank, the nation’s biggest lender with a 13 percent weighting in the Micex, increased 0.7 percent to 95.49 rubles.
Magnit’s global depositary receipts increased 1.2 percent to $53.40 in London.
“For Magnit, Lenta’s IPO is good for the sentiment because it serves as proof that despite the overall economic slowdown, this segment remains profitable,” 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. “I’m an optimist and think there’s room for the stock market to grow after a strong selloff.”
Lenta said it had an 11.4 percent margin on earnings before interest, taxes, depreciation and amortization last year, topping the 11.2 percent Ebitda ratio of Russia’s retail-industry leader Magnit.
Russia-dedicated stock funds posted $230 million of outflows in the week ended Jan. 29, the seventh consecutive week of redemptions, UralSib Capital LLC said on Jan. 31, citing EPFR Global data.
The dollar-denominated RTS Index (RTSI$) was little changed at 1,301.52. Russian equities have the cheapest valuations among 21 developing-nation economies monitored by Bloomberg. Shares on the Micex trade at 3.2 times projected 12-month earnings, compared with a multiple of 9.1 for the MSCI Emerging Markets Index.
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