Russian equities retreated for the first time in four days, posting the smallest price swings in almost two years, as OAO Sberbank fell and U.S. lawmakers continued budget talks.
The 50-stock Micex Index dropped 0.2 percent to 1,478.83 by the close in Moscow after adding as much as 0.4 percent earlier. The index’s 10-day volatility dropped to 7.6, trading near the lowest level since December 2010. Sberbank, the country’s largest lender, which has the second-biggest weighting in the gauge at 14 percent, sank 0.6 percent, falling for the first time in four days.
U.S. House Speaker John Boehner’s plan for the budget would put “too big a burden on the middle class” and President Barack Obama would veto it, White House Communications Director Dan Pfeiffer said, fueling concern that progress in budget talks is deteriorating. The dollar-denominated RTS Index rose 0.4 percent to 1,517.39.
“The fiscal cliff continues to weigh on investor sentiment,” Kingsmill Bond, Citigroup Inc.’s chief strategist for Russia, said by phone.
Federal spending cuts and tax increases of $600 billion will come into effect in January without action by the U.S. Congress. Federal Reserve chief Ben Bernanke began calling the combination of spending cuts and tax increases a “fiscal cliff” when he spoke to the House Financial Services Committee in February.
Obama proposed a budget plan that would cut about $1.2 trillion in federal spending and raise a similar amount in taxes in the next decade, according to a person familiar with the talks.
“Sentiment remains strong, as investors look set to end a difficult year on a positive note,” Slava Smolyaninov, an equity analyst at UralSib Financial Corp, wrote in an e-mailed report today. “The clear trigger is more comments of a looming compromise on the fiscal cliff, which may be announced as early as this week.”
The amount of shares traded was 25 percent below the 30-day average, according to data compiled by Bloomberg.
OAO RusHydro closed little changed at 75.07 kopeks, reversing gains of as much as 1.9 percent. Russia’s state-run hydropower producer may pay more than 25 percent of net income in dividends in five years, George Rizhinashvili, a deputy chairman at RusHydro, said in a phone interview from Moscow yesterday.
OAO Novorossiysk Commercial Sea Port tumbled 3.6 percent to 2.9 rubles, the sharpest drop since Oct. 23, making it the biggest decliner on the Micex. The amount of shares traded was 694,000, equivalent to about 70 percent of the three-month average.
Crude oil handling totaled 103 million tonnes in January-November, a 0.7 percent drop from January to November 2011, Novorossiysk said in a regulatory filing today. Novorossiysk reported “disappointing numbers” for November, Andrey Rozhkov, an analyst at IFC Metropol, said by phone from Moscow.
“Companies are become more responsive to the needs of the market, dividends are becoming a trendy theme,” Alexander Varyushkin, a partner at Third Rome LLC, said in Moscow at a press conference today.
Standard & Poor’s GSCI Index gained 0.1 percent to 641.05. Oil, Russia’s chief export earner, gained 0.2 percent to $88.11 a barrel in New York. Russia receives about half of its budget revenue from oil and natural gas sales.
OAO Severstal surged 4.2 percent to 375.30 rubles, the biggest gainer. The volume of shares traded was about 4 million, equivalent to 2.7 times the three-month average.
The Market Vectors Russia ETF, the largest dedicated Russian exchange-traded fund, yesterday added 1.4 percent to $29.85, the highest close since Sept. 18. The RTS Volatility Index, which measures expected swings in futures, fell 2 percent to 20.03.
The Micex trades at about 5.4 times estimated earnings after adding 5.5 percent this year. That compares with a multiple of 10.7 times for the MSCI Emerging Markets Index, which has gained 14.7 percent.
Russian equities have the lowest valuations based on estimated earnings among 21 emerging markets tracked by Bloomberg. Russia receives about half of its budget revenue from oil and natural gas industry sales.