Russian stocks erased gains as the economy in the U.S unexpectedly shrank in the fourth quarter, damping the outlook for global growth.
The Micex Index lost 0.4 percent to 1,543.43 by the close in Moscow, after advancing as much as 0.6 percent earlier. Of 50 stocks, 36 dropped and 14 gained. The dollar-denominated RTS Index declined 0.3 percent to 1,618.77. VTB Group, Russia’s second-biggest lender, retreated 3.3 percent.
Gross domestic product in the U.S. dropped at a 0.1 percent annual rate, weaker than any economist forecast in a Bloomberg survey and the worst performance since the second quarter of 2009, when the world’s largest economy was still in recession, Commerce Department figures showed today in Washington. Oil, Russia’s main export, pared gains after the data.
“This news may lead to a correction on the U.S. and Russian markets,” Kirill Bagachenko, who manages about $3 billion in Russian equities at TKB BNP Paribas Investment Partners in St. Petersburg, said by phone. “If the U.S. is facing a recession, it’s unclear what else the Fed could do to help the situation.”
OAO Sberbank, Russia’s biggest lender and the stock with the heaviest weighting in the gauge, rose 1.1 percent to 107.75 rubles. The lender added as much as 1.3 percent yesterday before closing down 0.4 percent.
Preferred shares of OAO Surgutneftegas rallied the most on the index as Citigroup Inc. named Russia’s fourth-largest oil producer a top pick in the oil and gas sector and raised its price estimate to 99 cents. Citigroup cited “strong” price growth, a “generous” dividend policy and expectations the stock will benefit from the introduction of a so-called T+2 settlement on the Moscow Exchange, according to today’s e-mailed note.
Surgut’s preferred stock rose 3.5 percent to 23.030 rubles, the highest level since February 2007. The amount of shares traded was 67 million, equivalent to about 2.8 times the three-month average. BCS Financial Group recommended buying Surgut preferred and ordinary shares and selling the stock of OAO Rosneft, Russia’s biggest oil producer, in an e-mail today. Rosneft retreated 1.6 percent to 266.81 rubles.
Russian dividend-paying stocks will outperform this year as the government increases pressure on lifting payouts, according to UralSib Capital in an e-mailed note today. Dividend stocks tend to outperform the market between January and May, with February being the “strongest” month, according to UralSib.
The Micex’s 10-day volatility rose to 12.996. The number of shares traded on the gauge was 80 percent above the 10-day average, data compiled by Bloomberg show. Standard & Poor’s GSCI Index of commodities climbed 0.4 percent to 673.28 after rising 0.8 percent yesterday.
Polyus Gold International Ltd. surged in London and Moscow as RIA Novosti reported the gold producer is selling four gold deposits for more than $2 billion. The shares added 1.8 percent in Moscow, while rising as much as 4.3 percent in London, the highest level since its listing in June.
Crude oil traded up 0.2 percent at $97.77 a barrel in New York. Russia receives about half of its budget revenue from oil and natural gas.
The Micex rose earlier on speculation the Federal Open Market Committee will renew its commitment to asset buying during a two-day meeting that started yesterday.
Tin, nickel and lead rose on the London Metal Exchange. The Russian Depositary Index lost 0.6 percent to 1,821.13.
The Market Vectors Russia ETF, the largest dedicated Russian exchange-traded fund, was little changed at $30.97 yesterday. The RTS Volatility Index, which measures expected swings in the stock futures, increased 1.8 percent to 20.42.
The Micex trades at about 5.7 times estimated earnings and has added 5.7 percent this year. That compares with a multiple of 11 times for the MSCI Emerging Markets Index, which has gained 1.7 percent over the same period.
Russian equities have the lowest valuations based on estimated earnings among 21 emerging markets tracked by Bloomberg.