Russian stocks fell for the first time in seven days, as crude producer OAO Lukoil tumbled amid a decline in oil and concern that a deadlock over the U.S. budget may curb economic growth.
The Micex Index retreated 0.3 percent to 1,462.87 by the close in Moscow. Oil and gas stocks lost 0.3 percent on average, the biggest decliners among industry sectors. Preferred shares of OAO Sberbank, the nation’s largest lender, lost 1.1 percent, while OAO Gazprom dropped 1.1 percent. AFK Sistema was the biggest decliner at 2.4 percent. Lukoil, which has the largest weighting on the index at 14 percent, fell 1 percent, the most in a month.
Bank and energy stocks retreated after House Speaker John Boehner told reporters in Washington said Republicans have “some serious differences” with U.S. President Barack Obama’s budget proposals. Federal Reserve bond purchases cannot offset the full effect of the so-called fiscal cliff, Chairman Ben S. Bernanke said. Crude, Russia’s chief export earner, dropped as much as 0.8 percent to $86.06 a barrel in New York after rising the most in two weeks yesterday.
“During his speech yesterday Bernanke made clear that the issues of the slowing economy and fiscal cliff remain, this cooled investor optimism toward Russia,” Viktor Markov, an analyst at Kapital Asset Management LLC, said by phone from Moscow. “Oil fell on Bernanke’s statements, it was trading at expensive levels.”
The Micex rose as much as 0.4 percent earlier. The dollar-denominated RTS Index retreated 0.5 percent to 1,499.68, the most since Dec. 4. Standard & Poor’s GSCI Index lost 0.3 percent.
The number of shares traded on the Micex was 53 percent above the 10-day average, Bloomberg data show.
The initial optimism to the Fed’s plans “later faded as the fiscal cliff reared its ugly head, pressuring risk sentiment,” Maxim Korovin and Anton Nikitin, VTB Capital analysts, wrote in an e-mailed report today.
OAO Pharmacy Chain 36.6, Russia’s biggest drugstore chain, climbed as much as 4.6 percent before closing up 0.4 percent at 33.82 rubles. The volume of shares traded exceeded 230,000, equivalent to 1.9 times the three-month average. Drugstore retail sales increased 4 percent in the first nine months of this year to 10.94 billion rubles, the company said in a statement today.
EON Russia, a unit of Germany’s largest utility, rose 2.7 percent to 2.50 rubles, the biggest Micex gainer. The company may pay its “entire” 2012 net income as dividends, Interfax reported yesterday, citing Ulf Backmeyer, deputy general director of finance, economics in Russia. Alfa Bank cited the company as its top sector pick on “healthy” dividend expectations.
OAO Rostelecom shares advanced after Russian Deputy Prime Minister Arkady Dvorkovich urged the telecom operator’s board and Telecommunications Ministry to improve cooperation and work on the company’s merger with Svyazinvest, according to a government statement after the meeting yesterday. The shares rose 0.8 percent to 118.32 rubles.
Telecom stocks climbed 0.3 percent on average. OAO Mobile TeleSystems increased 0.3 percent to 239.47 rubles.
The Market Vectors Russia ETF, the largest dedicated Russian exchange-traded fund, rose 1 percent to $29.35 yesterday, the highest level since Oct. 18. The RTS Volatility Index, which measures expected swings in the stock futures, slipped 1.5 percent to 22.3 points.
VimpelCom Ltd., the world’s sixth-biggest mobile phone company by subscribers, slipped yesterday 1.7 percent to $11.06 in U.S. trading.
VimpelCom and the Algerian government have formed a new company to operate VimpelCom’s Orascom Telecom Holding SAE’s local unit, Vincenzo Nesci, chairman of Orascom-Telecom Algerie, also known as Djezzy, told reporters yesterday in Algiers. The new company, Optimum Telecom Algerie, is 51 percent owned by Algeria with the remaining portion held by VimpelCom, Nesci said.
The Micex trades at 5.5 times estimated earnings after gaining 4.3 percent this year. That compares with a multiple of 10.6 times for the MSCI Emerging Markets Index, which has added 14 percent.
Russian equities have the lowest valuations based on estimated earnings among 21 emerging markets tracked by Bloomberg.