Most Russian Stocks Fall as Aid Convoy Rekindles Ukraine Tension

Most Russian stocks fell as Ukraine warned a humanitarian aid mission from Moscow may be a guise to bring military gear into the country’s war-torn eastern regions.

Twenty-eight stocks dropped and 22 rose, leaving the Micex Index little changed at 1,374.19 at the close in Moscow. The gause earlier rose as much as 1 percent and dropped as much as 0.3 percent. OAO Sberbank, the nation’s biggest lender, declined 1.2 percent after a 5 percent gain yesterday.

Russia’s Emergencies Ministry said 280 trucks carrying 2,000 metric tons of donated food, medicine and water left Moscow for rebel-held regions in Ukraine today. Ukrainian military spokesman Andriy Lysenko said they carried military gear in the guise of aid and an official in the presidential administration said the convoy doesn’t adhere to international rules and must be led by the Red Cross.

“The market is pricing in expectations of further escalation,” Kirill Yankovskiy, director of equity sales at Otkritie Capital in London, said by e-mail. Signs of hope for a de-escalation “have been erased for now,” he said.

Speculation that President Vladimir Putin was seeking to ease the stand-off with Ukraine and it’s U.S. and European Union allies helped spur buying since the Micex’s price-to-earnings ratio fell to 4.8 times 12-month projected earnings on Aug. 8, according to data compiled by Bloomberg.

The valuation multiple rose to 4.9 today, the cheapest among 21 emerging-market measures tracked by Bloomberg and compared with 5.3 at the end of February, before Russia’s incursion into Ukraine’s Crimea peninsula.

Telecom Plays

The number of shares above their 50-day moving average was 17 yesterday, up from a four-month low of 10 on Aug. 7.

The dollar-denominated RTS Index (RTSI$) fell 0.4 percent today and the ruble weakened for the first time in three days, falling 0.6 percent against the dollar to 36.1355.

OAO Mobile Telesystems, Russia’s biggest mobile operator, rallied for a fourth day, adding 1.7 percent, and OAO MegaFon, billionaire Alisher Usmanov’s wireless company, gained 2.1 percent, rising for a third day to the highest level since July 24. MTS was the Micex’s biggest advancer by index points.

“In times of uncertainty, investors stick to good dividend paying stocks with healthy stable cashflows, and the two telecoms are among the most prominent dividend plays,” Slava Smolyaninov, a strategist at UralSib Financial Corp., said in e-mailed comments.

U.S. exchange-traded funds that invest in Russia led net inflows of capital among country-focused ETFs yesterday, according to data compiled by Bloomberg. The daily net flow for Russia was $35.4 million.

To contact the reporter on this story: Priyanka Sharma in London at psharma142@bloomberg.net

To contact the editors responsible for this story: Daliah Merzaban at dmerzaban@bloomberg.net Chris Kirkham, Stephen Kirkland

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