Russia’s benchmark stock gauge extended its worst start to the year since 2008 as all eight industry groups in the measure slid amid a global equity rout.
The Micex Index dropped 0.8 percent to 1,431.84 by 11:50 a.m. in Moscow, the lowest since Dec. 6, taking this year’s loss to 4.8 percent. OAO Gazprom shares fell for a fourth day, sliding 1.3 percent to 139.77 rubles. OAO Alrosa decreased 3.8 percent to 34.35 rubles following a Kommersant report OAO Rosneft seeks to cut the price of gas assets it agreed to buy from the nation’s biggest diamond producer for $1.4 billion.
Russian stocks have retreated this year as a report on Jan. 31 showed economic growth in 2013 was less than half the previous year’s pace, falling short of economist forecasts, and the Federal Reserve pushed ahead with cuts to its monetary stimulus. January’s weaker-than-expected manufacturing growth released yesterday in the U.S. helped extend a selloff that’s erased about $2.9 trillion from global equities this year, according to data compiled by Bloomberg.
“Equities have long lost the appeal for investors,” said Stanislav Kopylov, who helps manage about $3 billion at UralSib Asset Management in Moscow, by phone. “The Fed’s decision to curb the stimulus program is the main reason behind the slump.”
The MSCI World Index has slumped 6 percent this year, dropping 2.9 percent in the last three days.
Fed policy makers reduced the pace of bond buying for a second straight meeting on Jan. 29. The Micex Index (INDEXCF) 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.
The Micex’s 14-day relative strength index dropped to 30, a threshold that signals to some technical analysts that a security is probably oversold.
The ruble has slumped 7.2 percent against the dollar this year, the second-worst performer among 24 emerging-market currencies tracked by Bloomberg. 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, data showed yesterday, adding to evidence that the world’s second-largest economy is slowing. A reading above 50 indicates expansion.
Russia-dedicated stock funds posted $230 million of outflows in the week ended Jan. 29, the seventh consecutive week of redemptions, UralSib Capital LLC said on Jan. 31, citing EPFR Global data.
“Major outflows from emerging-market funds continue and Russia is no exception to this trend,” Kopylov said.
The dollar-denominated RTS Index (RTSI$) dropped 1.5 percent to 1,273.64. Russian equities have the cheapest valuations among 21 developing-nation economies monitored by Bloomberg. Shares on the Micex trade at 3.1 times projected 12-month earnings, compared with a multiple of 8.9 for the MSCI Emerging Markets Index.
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