Russian stocks declined to the lowest in a week after oil dropped as European Central Bank President Mario Draghi failed to reassure investors on immediate efforts to stem the region’s debt crisis.
The Micex Index slid 1.1 percent to 1,397.05 by 6:45 p.m. in Moscow, the lowest since July 26, having earlier lost as much as 1.8 percent. OAO Rosneft, the country’s biggest oil producer, slumped 2.2 percent after posting a second-quarter net loss. Federal Grid Co., Russia’s high-voltage power transmission monopoly, retreated 4.4 percent. OAO Uralkali, the world’s biggest potash producer, dropped 2.2 percent while miner OAO Raspadskaya retreated 1.7 percent.
Crude oil, Russia’s chief export earner, declined as much as 2.2 percent after Draghi failed to give details of a plan designed to shore up the euro by curbing rising government borrowing costs in the region. The ECB head pledged on July 26 to do “whatever it takes’” to stem the debt crisis in Europe. Oil and gas contribute about 50 percent of Russia’s state revenue.
“There was an expectation by the market that Draghi would do something to intervene based on his statements made last week,” Andrey Kuznetsov, a Citigroup Inc. equity strategist in Moscow, said by phone. “His comments today have disappointed and we have seen profit-taking as a result.”
The dollar-denominated RTS Index slipped 1.4 percent to 1,355.32.
The Micex trades at 5.2 times estimated earnings, having gained 1.6 percent this year. That compares with a multiple of 9.7 times for companies in the MSCI Emerging Markets Index, which has added 3.6 percent this year.
Russian equities have the lowest valuations based on estimated earnings among 21 emerging markets tracked by Bloomberg.