Russian shares had the worst quarter since the three months ended June on concern Cyprus’s debt crisis may wipe out as much as $60 billion in Russian deposits and loans.
The Micex Index added 0.3 percent to 1,438.57 by the close in Moscow, paring its retreat this quarter to 2.5 percent. The dollar-denominated RTS Index increased 0.4 percent to 1,460.04. Trading volumes on the Micex were 68 percent below the 30-day average and 10-day price swings slumped to 12.513.
Cyprus’s banks opened their doors to customers yesterday for the first time in almost two weeks, with new rules curbing access to cash. The Central Bank of Cyprus’s capital controls will include a 300-euro ($383) daily limit on withdrawals and restrictions on transfers to accounts outside the country. Most markets were shut in Asia, Europe and Latin America for holidays. Stocks climbed today as confidence among U.S. consumers unexpectedly increased in March from the prior month.
“We expect the Russian market to continue falling next quarter,” Andrey Vashevnik, who manages $25 million as chief investment officer at R&B Investment Fund Ltd. in Moscow, said by phone from Moscow. “Cyprus spoiled the market’s mood this quarter, deposits turned out to not be a safe investment. Investors are in a bad mood, capital flight continues.”
Russian equity funds posted $235 million in outflows in the week ended March 27, the most since September 2011, UralSib Capital said in a note today, citing EPFR Global data.
Russian lenders and companies had about $31 billion in Cypriot banks by the end of 2012, according to a report by Moody’s Investors Service this month, while another $29 billion has been given in loans to Cypriot firms with origins in Russia. The benchmark Micex Index last week recorded its steepest decline since May following a proposal to tax savings accounts to secure a 10-billion euro bailout from the euro area.
OAO Raspadskaya, a coal producer, fell 2.2 percent to 58.41 rubles. The company said it doesn’t plan dividends for 2012. The OAO Alrosa diamond producer rose 2 percent 31.582 rubles. The Moscow Exchange jumped 5.8 percent to 51.86 rubles.
Russian equities have the cheapest valuations among 21 emerging markets tracked by Bloomberg. The Micex trades at 5.3 times estimated earnings. That compares with a multiple of 10.5 times for the MSCI Emerging Markets Index, which has slid 2 percent this year.
The Market Vectors Russia ETF, the largest dedicated Russian exchange-traded fund, jumped 1 percent to $27.75 yesterday in New York. The RTS Volatility Index, which measures expected swings in the stock futures, fell 5.1 percent to 17.46 today. The Bloomberg-Russia gauge added 0.2 percent to 97.38 yesterday.