Russian stocks declined for a third day as investors sold riskier assets after the International Monetary Fund cut its global growth forecast, fueling concern demand for commodities may drop.
The Micex Index fell 0.8 percent to 1,460.93 by the close in Moscow, the biggest drop since Oct. 4. United Co. Rusal led the declines as Alcoa Inc. cut its forecast for global aluminum demand, indicating a slowdown in China. Metals producers sank, with OAO GMK Norilsk Nickel losing 1.7 percent, OAO Magnitogorsk Iron & Steel declining 2 percent and OAO Mechel dropping 1.6 percent. OAO Mobile TeleSystems surged 1.9 percent, the biggest gainer.
The IMF cut its global growth forecast this year to 3.3 percent, the slowest since 2009. Spain has yet to respond to the European Central Bank’s offer to buy its debt to lower unsustainable borrowing costs. Europe is Russia’s biggest trading partner.
“For every positive event out of the Eurozone, investors have five they are worried about,” Farhan Kazmi, the head of emerging-market equities at Credit Suisse Group AG in Moscow, said by phone. “There’s enough reason for concern that investors are refraining from trading. IMF and weaker oil are some of the factors that affect today’s market move.”
Crude oil, the nation’s chief export earner, rebounded, rallying 1.3 percent to $93.62 a barrel in New York, after rising as much as 3.4 percent yesterday. Oil and gas contribute about 50 percent of Russia’s budget revenue. Standard & Poor’s GSCI Commodities Index rose 0.6 percent to 671.49.
This year may signal the start of a downturn for Russian steel producers, Sberbank Investment Research analysts wrote in a note today, citing global economic concern, cost pressures and rising supply in the local market. Sberbank favors Magnitogorsk and Novolipetsk because of their “low capital intensity” and “flexible” cost base, according to the note.
OAO Lenenergo climbed to a four-month high, rising 1.6 percent to 7.363 rubles. OAO MRSK Holding, the nation’s largest electricity distribution company, may overpay for a stake in the power transmission operator, Reuters reported. Federal Grid Co., which has merged with MRSK Holding this year, lost 2.2 percent to 23.17 kopeks. MRSK declined 1.7 percent to 2.080 rubles, the lowest level since Sept. 7.
The dollar-denominated RTS Index declined 0.7 percent to 1,483.84. The Micex trades at 5.6 times estimated earnings. The benchmark index has risen 4.2 percent this year. That compares with a multiple of 10 times and a 8.4 percent advance for the MSCI Emerging Markets Index.
Russian equities have the lowest valuations based on projected earnings among 21 emerging markets tracked by Bloomberg.