Russian equities retreated, pushing the benchmark gauge to its second weekly decline, as an economic contraction in the euro region curbed investor appetite for riskier assets.
The Micex Index slipped 0.2 percent to 1,383.66 by the 6:45 p.m. close in Moscow, leaving this week’s decline at 1.3 percent. Basic materials and utilities led the slump, losing at least 0.8 percent. OAO Mechel tumbled as much as 2.6 percent after MSCI Inc. said it will remove the coking coal producer’s American depositary receipts from its Russia large-cap index. OAO Transneft climbed the most in more than two months as investors bet the oil pipeline operator will boost dividends after the government approved payout rules for state companies.
The economy of the euro-area, Russia’s biggest trade partner, slipped into recession for the second time in four years, a report showed yesterday. Israel’s defense minister signaled the country is ready to escalate military operations against Gaza after at least one long-range missile was fired at Tel Aviv by Palestinian militants.
“The global macro news flow remains unsupportive with euro zone’s recession being confirmed yesterday and Middle East tensions,” Peter Szopo, head of research at Alfa Bank, said by e-mail today.
OAO Gazprom, Russia’s largest company and natural gas producer, dropped 1.1 percent to 140.36 rubles. Uralkali, the world’s largest potash producer, lost 2.7 percent to 299.08 rubles. Belarus is discussing the sale of 10-15 percent of Belaruskali to India, Interfax reported, citing First Deputy Prime Minister Vladimir Semashko.
Transneft rose 4.5 percent to 61,860 rubles in Moscow, the biggest one-day gain since Sept. 14. The number of shares traded was 20,595, equivalent to about 187 percent of the three-month average.
Russia approved regulations requiring state companies to pay no less than 25 percent of their net income in dividends, according to a document posted on the government’s website today. Transneft plans to pay a dividend equal to 10 percent of net income under Russian accounting standards for 2011 to preferred shareholders, Igor Dyomin, a spokesman for the company, said by phone on May 24.
The Market Vectors Russia ETF, the largest dedicated Russian exchange-traded fund, was little changed at $26.52 in New York. Russia equity funds lost $48 million in the week ended Nov. 14, Sberbank CIB analysts wrote in a research note, citing EPFR Global data. This is the sixth consequent week of outflows, according to Sberbank CIB.
The Micex trades at 5.3 times estimated earnings after falling 1.7 percent this year. That compares with a multiple of 10 times for the MSCI Emerging Markets Index, which has added 6 percent.
Russian equities have the lowest valuations based on estimated earnings among 21 emerging markets tracked by Bloomberg.