Russian stocks retreated for a third day as oil traded near the lowest level in 10 weeks and China tightened mortgage rules to cool its property market, damping demand for emerging-market assets.
The 50-stock Micex Index fell 0.6 percent to close at 1,464.45 in Moscow, with 20 stocks climbing and 30 declining. United Co. Rusal slid 3.6 percent after the world’s biggest aluminum producer said it will reduce output by more than 7 percent this year after prices retreated and stockpiles swelled. Preferred shares of Rostelecom were the biggest gainer, rising by 3.6 percent, as Morgan Stanley said the new strategic shareholder may “please the market”.
Oil, Russia’s main export earner, sank 0.2 percent to $90.50 a barrel in New York. China called for higher down-payments and interest rates for second-home mortgages in cities with “excessively fast” price gains. The nation is the second-largest consumer of oil.
“Commodities, emerging markets and Russian equities are starting March on a weak note due to lost China momentum,” Slava Smolyaninov, an equity analyst at Uralsib Financial Corp., wrote in an e-mailed report today.
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.
Arkady Rotenberg’s purchase of a 10.7 percent stake in Rostelecom could be positive for the company’s equity story, and the stock could continue to outperform in the short term, Morgan Stanley analysts Polina Ugryumova and Edward Hill-Wood said in a note to clients.
The Market Vectors Russia ETF, the largest dedicated Russian exchange-traded fund, fell 1.6 percent to $28.36 by 6:47 p.m., dropping for a third day. The RTS Volatility Index, which measures expected swings in the stock futures, rose 5.9 percent to 23.66.
The Micex trades at about 5.5 times estimated earnings after losing 0.7 percent this year. That compares with a multiple of 10.4 times for the MSCI Emerging Markets Index and a drop of 1.3 percent.
-- Editors: Peter Branton, Tim Farrand