Russian stocks declined as investors speculated tensions will escalate in Ukraine and commodity producers retreated after Chinese exports plummeted.
The Micex Index (INDEXCF) dropped 0.7 percent to 1,330.06 in Moscow. United Co. Rusal, the world’s biggest aluminum producer, slipped 4.4 percent to 118.64 rubles. Steelmaker OAO Severstal retreated 1.5 percent to 276.40 rubles.
Ukraine began military drills as Russian forces tightened their hold on the Crimean peninsula, where residents will have the choice of joining Russia in a March 16 referendum. China’s exports fell the most since 2009 in February, data showed March 8. Russian markets were closed yesterday for a public holiday.
“People are avoiding Russian stocks on concern the standoff might escalate into a global conflict,” Oleg Popov, who helps manage $1 billion of securities for Allianz Investments in Moscow, said by phone. “The fact that China is facing a slowdown is particularly negative for commodity companies.”
The Micex had its steepest weekly tumble since May 2012 in the five days through March 7 after pro-Moscow forces took control of Crimea, spurring the worst standoff with the West since the end of the Cold War.
The 14-day relative strength index for the Micex fell to 30.8 today. A level of 30 signals a security is oversold. OAO Sberbank, the nation’s biggest lender, dropped 1 percent to 79.20 rubles today.
Lawmakers in the State Duma in Moscow will consider a Crimea annexation bill on March 21, according to the lower house of parliament’s website. Sanctions would follow any annexation, French Foreign Minister Laurent Fabius said on France Inter radio today.
Russia, which has vowed to defend the ethnic Russians who dominate the Crimea, accuses Ukraine of ignoring radicals in the nation’s east and said it rejects the legitimacy of the western-backed leadership in Kiev. Ukraine says its neighbor has almost 19,000 soldiers in the region, which will vote on joining Russia on March 16.
The dollar-denominated RTS gauge sank 12 percent into a bear market on March 3 as concern that President Vladimir Putin will invade Ukraine sent Russian assets tumbling. The index fell 0.6 percent to 1,152.36 today.
The ruble has depreciated 9.7 percent against the dollar this year, the second-worst performance among 24 emerging-market peers tracked by Bloomberg after Argentina’s peso, amid the Ukraine tensions and as the Federal Reserve scales back its asset-purchase program.
Russia’s equities have the cheapest valuations among 21 developing countries monitored by Bloomberg, with shares on the Micex trading at 4.8 times projected 12-month earnings, compared with a multiple of 10.2 for the MSCI Emerging Markets Index.
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