Micex Drops to 2-Week Low on Dividends as Russia Sanctions Loom

The Micex Index (INDEXCF) fell to a two-week low as oil producers including OAO Surgutneftegas traded without the right to a dividend and concern grew that European leaders may decide on new sanctions at a meeting tomorrow.

The gauge lost 0.5 percent to 1,475.77 by the close in Moscow, the lowest level since June 26. Surgut declined 1.4 percent while OAO Tatneft slid 3.7 percent. Road builder OAO Mostotrest, which is also trading ex-dividend, fell 5.8 percent. Adjusted for the payout, the stocks rose 0.9 percent, dropped 0.2 percent and added 0.6 percent, respectively.

Surgutneftegas ordinary and preferred shares have a 5.4 percent weighting in the Micex, while Tatneft’s ordinary and preferred shares comprise 2.6 percent. The U.S. urged its European allies to support deeper sanctions against Russia as Ukraine peace talks struggled to inch forward. The European Union’s first opportunity to consider wider penalties on industry, investment or trade will be at tomorrow’s Council of Europe meeting.

“Everyone is looking at the July 16 date, when Russia could potentially get hit by new sanctions,” Sergey Vakhrameev, a portfolio manager in Moscow at AnkorInvest LLC, said by phone. “The companies that are trading ex-dividend today are dragging the index down, this is a technical move.”

The dollar-denominated RTS Index (RTSI$) lost 0.7 percent to 1,352.15, the lowest since June 17. Thirty-one of the 50 stocks on the Micex declined, while 19 rose. The Micex has rallied 19 percent from this year’s trough on March 14, the last trading day before residents of Crimea voted to join Russia in a move that triggered the first round of sanctions.

Deeper Sanctions

The value of shares traded on the Micex today was 31.37 billion rubles ($913 million), compared with 64.5 billion rubles a month ago, according to data compiled by Bloomberg.

“I think there’s a real struggle in Europe right now over how to avoid sanctions against Russia,” Oleg Popov, who helps oversee $1 billion at Allianz Investments, the asset-management arm of Europe’s biggest insurer, said by phone. “I doubt that Europe will impose harsh measures.”

New penalties would threaten an economy forecast to grow 0.5 percent this year, the slowest pace since a contraction in 2009, according to a Bloomberg survey.

Deeper sanctions “could cause a selloff in Russian equities,” Dmitry Mikhailov, who helps oversee about $3 billion as a money manager at Alfa Capital Partners Ltd. in Moscow, said by e-mail today.

Mechel Jumps

OAO Mechel, the nation’s biggest coking coal producer, surged 8.1 percent to 42.7 rubles, the most since May 12. The company said in a statement it has reached a refinancing deal with VTB Bank. The deal extends the maturity for loans granted by VTB to the Southern Kuzbass Coal Co. and Yakutugol units and previously worth 15.8 billion rubles.

Lenta Ltd., Russia’s biggest hypermarket chain after OAO Magnit, jumped 5.3 percent. Revenue in the second quarter climbed 39 percent, the company said today.

OAO GMK Norilsk Nickel gained 0.5 percent to 7,300 rubles. The stock was cut to hold at BCS Financial Group today on “limited upside,” according to an e-mailed note.

To contact the reporter on this story: Ksenia Galouchko in Moscow at kgalouchko1@bloomberg.net

To contact the editors responsible for this story: Wojciech Moskwa at wmoskwa@bloomberg.net Chris Kirkham, Alex Nicholson

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