Russian stocks fell the most in two months as crude oil, the nation’s chief export earner, declined and investors sold riskier assets amid concern Europe’s debt crisis may not be contained.
The benchmark Micex Index lost 3 percent to 1,372.97 by the close in Moscow, the most since May 23. All 30 shares retreated. OAO MRSK Holding slipped 6.2 percent, the biggest decliner. OAO Sberbank, the nation’s largest lender, retreated 4.7 percent, and VTB Group slid 4.7 percent.
Crude fell 2.8 percent to $88.87 a barrel in New York, slipping for a second day. Oil and gas contribute about 50 percent of Russia’s state revenue. German Vice Chancellor Philipp Roesler said he’s “very skeptical” that European leaders will be able to rescue Greece as creditors prepared to meet this week in Athens.
“The devil is in the details, we have yet to see solid steps for containing the European debt crisis,” Yulia Bushueva, managing director at Arbat Capital Management in Moscow, which manages $50 million in Russian equities, said by phone. “Russian banks are highly correlated with the European events. Russia is tumbling with the rest of the world today.”
Standard & Poor’s GSCI Index fell 2.3 percent to 636.74, the biggest intraday drop since July 6.
Russia-dedicated equity funds posted outflows of $57 million in the week ended July 18, according to EPFR Global data.
Commodities declined as China said its economy is slowing. Economic expansion may cool for a seventh straight quarter to 7.4 percent in the three months to September, said Song Guoqing, a member of the People’s Bank of China monetary policy committee. In Greece, the troika of international creditors -- the European Commission, the European Central Bank and the International Monetary Fund -- will arrive tomorrow.
“This week should see more doom for the markets, again centered on European debt problems,” Chris Weafer, chief strategist at Troika Dialog, said in an e-mailed research note. “In Greece, the country and its creditors assess how far off course it is from the bailout targets, once more raising the specter of its exit from the euro.”
OAO Mechel declined 4.9 percent to 180 rubles, the most since June 4. Russia’s biggest producer of coal for steelmakers retreated on concerns China’s slowdown may curb demand for the commodity.
Evraz Plc dropped 7.5 percent to 216.80 pence in London, the lowest since the stock’s listing in November. Russia’s largest producer of steel by output appears “too ambitious” with its forecast of $5 billion in earnings before interest, tax, depreciation and amortization for 2016 as prices fall, Morgan Stanley said in today’s report.
The Micex trades at 5.1 times estimated earnings, having lost 2.1 percent this year. That compares with a multiple of 9.3 times for companies in the MSCI Emerging Market Index, which has dropped 0.7 percent this year.
Russian equities have the cheapest valuations based on estimated earnings among 21 emerging markets tracked by Bloomberg.