Russian stocks slid, extending the biggest quarterly drop in almost three years as concern the global expansion is faltering hurt the outlook for the country’s commodity producers.
The benchmark Micex Index declined 2.9 percent to 1,366.54 by the 6:45 p.m. close in Moscow, paring an earlier loss of as much as 4.7 percent and taking its quarterly drop to 18 percent, the worst three months since Dec. 31, 2008. The dollar-denominated RTS Index fell 3.5 percent to 1,341.09. OAO Sberbank, Russia’s biggest lender, slumped 5.7 percent. OAO Magnitogorsk Iron & Steel Works, Russian billionaire Victor Rashnikov’s steelmaker, decreased 5.2 percent.
Europe’s sovereign debt problems and a possible default by Greece are threatening to tip Russia’s biggest trading partner back into recession. Declines in Chinese manufacturing and German retail sales added to signs global growth is slowing.
“We are facing a slow-motion pile-up which is taking so long to unfold, mainly because of what they are not doing to address the European debt crisis,” Bruce Bower, a partner at Moscow-based Verno Capital, which has $150 million under management, said by phone today.
Retail sales in Germany, Europe’s largest economy, dropped the most in more than four years in August, according to a report today. A gauge of Chinese manufacturing shrank for a third month, the longest contraction since 2009. European inflation unexpectedly quickened to the fastest in almost three years this month.
OAO Uralkali, the world’s biggest producer of potash, a fertilizer ingredient, plunged 9.3 percent, after a U.S. Department of Agriculture report showed higher-than-expected corn stocks.
OAO Rosneft, Russia’s largest oil producer, slid 3.4 percent to 189.84 rubles, while smaller rival OAO Lukoil slipped 1.1 percent to 1,637.4 rubles. Urals, Russia’s main export blend of oil, declined 0.5 percent to $102.74. Brent dropped 2 percent to $101.87 a barrel in London.
Russia-focused funds had their second-biggest weekly outflow in two years, UralSib Financial Corp. said today, citing EPFR Global Data. The funds saw net outflows of $443 million in the week ending Sept. 28, the 12th consecutive week of declines, according to an e-mailed research note.
Part of the outflow was due to Prime Minister Vladimir Putin’s decision over the weekend to return as president and the ouster of Alexei Kudrin, Russia’s long-serving Finance Minister, on Sept. 26 after he criticized President Dmitry Medvedev’s support for increased defense spending, according to Renaissance Capital.
“The biggest reason for the large outflow is global risk aversion, but it’s partly down to the emotional reaction to Kudrin’s departure and the political tensions we’ve seen,” Ovanes Oganisian, a Moscow-based equity strategist at Renaissance, said by phone today.
The Micex has fallen 19 percent this year and trades at 4.9 times estimated earnings compared with a 24 percent drop for the MSCI Emerging Markets Index, which is valued at 9.4 times earnings.