Russian stocks and the ruble retreated as Western nations pressure Russia against moving to annex Ukraine’s Crimea region.
The Micex declined 4.5 percent to 1,192.29 by 11:40 a.m. in Moscow, a 24 percent drop from its January 2013 high. The gauge is poised for its biggest weekly slide since September 2011. Bonds fell for a sixth day, driving up the yield on government debt due February 2027 32 basis points to a record 9.73 percent. The ruble weakened 0.1 percent to 43.0419 against Bank Rossii’s target basket of dollars and euros.
U.S. Secretary of State John Kerry told a Senate panel in Washington yesterday that the U.S. and Europe will take “very serious” steps the day after the Crimea vote “if there is no sign” of a resolution to the crisis. Russia’s equities have the cheapest valuations among 21 developing countries monitored by Bloomberg, with shares on the Micex trading at 4.3 times projected 12-month earnings, compared with a multiple of 9.9 for the MSCI Emerging Markets Index.
“Investors are scared of potential sanctions that may follow the Sunday vote,” Dmitry Mikhailov, who helps oversee about $3 billion as a money manager at Alfa Capital Partners Ltd. in Moscow, said by phone today. “People are selling Russian shares as a preventative measure in case sanctions are imposed.”
Power utility OAO Inter RAO UES tumbled 13 percent to 0.63 kopeks, while OAO Mechel, the nation’s biggest coking coal producer, slumped 16 percent to 33.30 rubles.
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