Russian stocks fell for the first time in four days, erasing earlier gains, as investors awaited Federal Reserve Chairman Janet Yellen’s first report on monetary policy and oil declined.
The Micex Index (INDEXCF) dropped 0.2 percent to 1,476.28 by the close in Moscow after risen as much as 0.5 percent in the session. Food retailer OAO Magnit fell 2.1 percent, the most since Jan. 21, while OAO Sberbank, the nation’s biggest lender, sank 1.2 percent to 95.49 rubles.
The Micex followed U.S. stocks lower before Yellen speaks on policy and the outlook for the economy tomorrow for the first time after being sworn in as the central bank’s head on Feb. 3. Crude oil, Russia’s chief export earner, snapped three days of gains in London, sinking as much as 0.6 percent to $108.87 a barrel after the biggest gain in three months on Feb. 7.
“Without a boost to the risk appetite, Russia is hardly going to rise, despite the high oil price,” Evgeny Loktyukhov, an analyst at OAO Promsvyazbank, said by e-mail. “The nearest risk is tomorrow’s speech by the new head of the Federal Reserve Yellen, which can shed some light on the Fed’s plans regarding stimulus tapering and spur a re-evaluation of the risks behind emerging markets.”
The Fed pressed ahead with scaling back stimulus in January, cutting its monthly bond buying by $10 billion to $65 billion. The Micex Index advanced an average 77 percent during the Fed’s first two rounds of debt purchases, and fell 0.6 percent in periods of no stimulus, the biggest difference of 46 emerging and developed markets tracked by Bloomberg.
The dollar-denominated RTS Index (RTSI$) fell 0.4 percent to 1,336.02. 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.
The ruble has slumped 5.6 percent against the dollar in 2014, the fourth-worst performer among 24 emerging-market currencies tracked by Bloomberg, amid Fed tapering. A weaker ruble encourages Russians to withdraw and convert local-currency deposits, while hurting retailers by making imports more expensive.
Sberbank snapped three days of gains in Moscow, while its depositary receipts retreated 0.9 percent in London to $11.03. VTB Group, the nation’s second-biggest lender, tumbled 1.1 percent to 4.55 kopeks and dropped 0.2 percent in the U.K. capital to $2.58.
Magnit, Russia’s biggest grocer, fell to 8,279.90 rubles. The company’s net retail sales increased 25 percent in January to 51.7 billion rubles ($1.5 billion), the company based in Krasnodar, southern Russia, said today.
“Magnit posted good results but people always have inflated expectations for them,” Sergey Vakhrameev, an analyst in Moscow at AnkorInvest LLC, said by phone. “Ruble devaluation is negative for banks.”
The ruble depreciation should help “provide a constructive outlook for Russian energy names in 2014,” according to Goldman Sachs Group Inc., which raised its coverage view on the nation’s oil industry to attractive from neutral.
OAO Rosneft (ROSN), which was lifted to buy at Goldman analysts including Geydar Mamedov in a report today, advanced 0.6 percent to 247.41 rubles in Moscow, while OAO Lukoil, Russia’s biggest non-state crude producer, added 0.6 percent to 1,987.50 rubles. OAO Bashneft jumped 4 percent to 2,163 rubles.
Rosneft, the nation’s largest crude producer, should benefit from improving capital spending control this year and strengthening cash-flow generation, as well as the ruble’s decline against the dollar, Goldman said.
“Unlike banks, oil companies benefit from the ruble devaluation,” AnkorInvest’s Vakhrameev said.
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