Russian shares sank to a four-month low as Federal Grid Co. and OAO MRSK Holding, the nation’s largest power grid companies, tumbled on concern minority shareholders won’t be able to benefit from their merger.
The Micex Index fell 0.6 percent to 1,408.55 by the close in Moscow, the lowest since Nov. 30, after a 1.5 percent retreat last week. Trading volumes were 1.2 times above the 30-day average, while 10-day price swings retreated to 8.4, the lowest since Feb. 12. Federal Grid dropped as much as 7.3 percent, closing down 6.5 percent at 14.04 kopeks. MRSK fell 4.2 percent before paring its decline to 1.5 percent at 1.495 rubles. Utilities lost 3.1 percent on average on the Micex, the most of nine industry groups.
The board of directors of OAO Russian Grids, as the merged company is known, approved issuing an additional 161 billion shares at 2.79 rubles each, which can be paid for in cash or swapped for Federal Grid shares at 28.36 kopeks each, according to a filing today. Russia will exchange the ordinary stock it holds in Federal Grid for new shares of Russian Grids, acquiring 86 percent in the new company as a result.
“Although the price offering is at a premium to the market, the minority investors won’t be able to participate in the share swap,” Igor Goncharov, an analyst at BCS Financial Group, said by phone from Moscow. “There is no obligation to buy out minority investors.”
President Vladimir Putin in November signed a decree transferring 79.55 percent of Federal Grid’s shares to MRSK Holding. Federal Grid will become a unit of Russian Grids and its shares will continue to be listed and trade on the Moscow Exchange, according to today’s statement.
The dollar-denominated RTS Index added 0.6 percent to 1,419.63.
Crude oil climbed 0.3 percent to $92.98 in New York, the first advance in four days. Russia receives about half its budget revenue from oil and natural gas. Out of 50 stocks on the Micex, 9 rose and 41 fell.
After three weekly declines “we expect Russia to try to consolidate,” Farhan Kazmi, the head of emerging-market equities at Credit Suisse Group AG in Moscow, said by e-mail.
OAO Rosneft, Russia’s largest oil producer, declined 2.1 percent to 225.98 rubles. The stock was down 0.6 percent to $7.180 in London. Goldman Sachs Group Inc. reinstated the stock at neutral, saying there were no catalysts for a re-rating.
OAO Gazprom, the natural-gas export monopoly and Russia’s biggest company, retreated 1.1 percent to 129.08 rubles. Goldman cut the stock to neutral from buy, saying increased dividends are “not likely” as 2012 profit fell 37 percent based on domestic accounting standards. The shares added 0.3 percent to $8.215 in London.
The Standard & Poor’s GSCI Index increased 0.5 percent to 631.12. Most metals, including zinc, tin and nickel gained in London.
VTB Group, Russia’s second-biggest lender, added 2.3 percent to 4.79 kopeks. The volume of shares traded was 83 billion, equivalent to about 2.1 times the three-month average. OAO Sberbank, Russia’s biggest lender, increased 1.1 percent to 100.35 rubles.
The RTS Volatility Index, which measures expected swings in stock futures, rose 6 percent today. The Market Vectors Russia ETF, the largest dedicated Russian exchange-traded fund, added 0.2 percent to $27.02 today. The Bloomberg Russia-US Equity Index slid 0.2 percent to 94.40 in New York today.
Russian equities have the cheapest valuations among 21 emerging markets tracked by Bloomberg. The Micex trades at 5.2 times estimated earnings and has lost 4.5 percent this year, compared with 10.2 times for the MSCI Emerging Markets Index, which has slid 4.6 percent this year.