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Yandex Slides as Web Blocking Law Takes Effect: Russia Overnight

Yandex NV sank the most in two weeks in New York on concern a new law allowing Russia’s government to block access to websites will deter advertisers from the nation’s most-used search engine.

Shares of Yandex slipped 1.3 percent to $23 on the Nasdaq Stock Exchange yesterday, defying a 2 percent jump in the Bloomberg Russia-US Equity Index of the most-traded Russian companies in New York. Futures expiring in December on Moscow’s RTS Index climbed 0.4 percent to 143,970 in U.S. trading hours, as a gauge of volatility in the contracts fell for a fourth day.

The law, which enables Russian regulators to block access to websites deemed to be promoting criminal activity against children without a court order, came into force yesterday, according to the communications regulator. Yandex, up 17 percent this year, tried to delay approval of the law, saying more consultation with the Internet industry was needed. In July, Wikipedia temporarily shut its website in protest.

“There are lots of questions on how this law will work and whether it means a potential increase in spending for Yandex and complications for its business operations,” Konstantin Belov, an analyst at UralSib Financial Corp in Moscow, said by phone yesterday. “It may potentially lead to a reduction in some advertising revenue, particularly from the websites.”

The Market Vectors Russia ETF, the largest dedicated Russian exchange-traded fund, rose 0.9 percent to $28.09 yesterday, rising for the first time in three days. Trading volumes were 11 percent above the average each day over the last three months.

Yandex Campaign

The RTS Volatility Index, which measures expected swings in futures, fell 0.3 percent to 25.59 points. Futures contracts on the ruble due in December were little changed at 31.517 per dollar yesterday, after the currency jumped 0.3 percent to 31.26 per dollar in Moscow.

The law allows the blocking of access to websites using IP addresses and domain names and would create a registry of resources banned for publication. Regulators wouldn’t have to go to court to blacklist or strike down a website.

The Hague, Netherlands-based Yandex mounted a campaign against the law. In July, the company put its slogan “Everything will be found” on its front page with two red slashes across part of it, linking to a company statement warning that the legislation may stifle speech and saying it could spawn abuses. Vkontakte, Russia’s largest social networking website, also joined the protest. Falls

Yandex said on Oct. 30 that net income rose 34 percent in the third quarter to 2.3 billion rubles ($73 million) from the same period a year earlier. Revenue climbed 41 percent to 7.3 billion rubles, the company said.

Trading volumes for Yandex were 7 percent above the three-month average for the stock yesterday, data compiled by Bloomberg show. Thirty-day volatility, a measure of swings in the shares, rose to 23.73, the highest since Oct. 23. Group Ltd., a Russian-language Internet company, fell 1 percent to $33 in London yesterday, slipping for the first day this week.

VimpelCom Ltd., the world’s sixth-biggest mobile phone by number of subscribers, gained 3.3 percent to $11.38 in New York, climbing the most since Aug. 17. Volumes were 42 percent above the three-month average.

Jon Baksaas, chief executive officer of Telenor ASA, a VimpelCom investor, said in an interview with the Financial Times Oct. 31 that the Norwegian company would be “pragmatic” about selling its stake should “others have a strong appetite.”

‘Pragmatic View’

Russian billionaire Mikhail Fridman’s Altimo, an investment company that boosted its stake in VimpelCom last month, is “satisfied” with the current stakeholder structure of the Amsterdam-based phone provider, Evgeny Dumalkin, vice-president of Altimo in Moscow, said by e-mail yesterday. Altimo increased its stake to 47.9 percent of voting rights in VimpelCom on Oct. 30, while Telenor owns 43 percent.

“We have a pragmatic view given the fact that Altimo now is definitely in control of the company,” Dag Melgaard, an Oslo-based spokesman for Telenor, said by e-mail yesterday.

Russia’s anti-monopoly service is disputing Telenor’s right to boost its stake in VimpelCom.

Crude oil, Russia’s biggest export earner, climbed to a one-week high in New York yesterday, after crude supplies fell 2.05 million barrels to 373.1 million barrels last week. A gain of 1.8 million was the median estimate of analysts surveyed by Bloomberg.

Surgut Surges

Oil for December delivery rose 1 percent to $87.09 a barrel on the New York Mercantile Exchange, the highest settlement price since Oct. 22. Prices are down 12 percent this year. Brent crude for December settlement dropped 0.6 percent to $108.01 on the London-based ICE Futures Europe exchange, while Urals crude, Russia’s chief export blend, rose 0.6 percent to $108.18 yesterday.

OAO Surgutneftegas, Russia’s fourth-largest oil producer, was the biggest gainer on Russia-U.S. measure yesterday, jumping 5.7 percent $6.16, narrowing the discount to its Moscow-traded shares to 1.7 percent. The company’s preferred stock rose 0.9 percent to 19.596 rubles, or 63 U.S. cents, on the Micex Index. One ADR equals 10 shares. Surgut futures due next month gained 0.5 percent in New York yesterday.

The Standard & Poor’s 500 Index added 1.1 percent to 1,427.59 yesterday, while the S&P GSCI Spot Index of 24 commodities increased 0.2 percent to 638.86.

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