Russian shares slid to the lowest level since November, recording their fourth weekly decline, as crude slumped and concern the nation’s economic growth is slowing pared appetite for stocks in the world’s biggest energy exporter.
The Micex Index dropped 1.1 percent to 1,385.84 at the close in Moscow, the lowest level since Nov. 28 and an 11 percent retreat from this year’s high reached on Jan. 28. The gauge capped a 2.2 percent slide in the week. Trading volumes were 9.4 percent above the 30-day average, while 10-day price swings rose to 13.285, the most since March 28.
Crude, Russia’s biggest export, retreated to a one-month low, falling 2.9 percent to $90.81 per barrel in New York as Cyprus was said to seek more funds from the European Union and as U.S. retail sales dropped. OAO Mechel, a coking coal and steel producer, fell 6.3 percent to 131 rubles, the lowest since March 2009. Russian economic growth is forecast to slow to 2.4 percent this year on high interest rates and lower gas exports, Economy Minister Andrei Belousov told reporters today.
“It’s hard to find any positive news,” Dmitry Mikhailov, who manages $130 million in assets at Renaissance Capital in Moscow, said by phone today. “The Russian market is falling against the backdrop of the economic slowdown forecasts. Oil, metals continue to fall.”
The Economy Ministry cut the GDP forecast for 2014 to 3.7 percent from 4.3 percent and for 2015 to 4.1 percent from 4.5 percent, according to a website statement today.
The relative strength index on the Micex was at 28. A value below 30 signals the index has been oversold and may reverse losses.
Russian fund outflows in the week ended April 10 were $393 million, the most since September 2011, according to an e-mailed note from UralSib Capital, citing EPFR Global data.
The Standard & Poor’s GSCI Index of commodities retreated 2 percent to 619.02. The Russian Depositary Index declined 1 percent, led by VTB Group’s and OAO Sberbank’s depositary receipts, which lost at least 2 percent.
Metal producers OAO Magnitogorsk Iron & Steel and United Co. Rusal slid 3.1 percent and 5.8 percent respectively. The dollar-denominated RTS Index sank 1.9 percent to 1,405.47.
VTB Group, Russia’s second-biggest lender, dropped 1.4 percent to 4.71 kopeks, falling for the second day. VTB’s depositary receipts tumbled 2.1 percent to $3.005 in London. Sberbank retreated 3.9 percent to 98.43 rubles. The stock has the third-biggest weighting on the Micex at 14 percent.
OAO RusHydro slumped 2.7 percent to 49.88 kopeks, the lowest since November 2008. The company’s depositary receipts fell 3.7 percent to $1.556, the lowest level since July 2009.
The personnel committee of the nation’s biggest renewable energy producer yesterday recommended that the board of directors nominate Vladimir Pekhtin to the management board, according to a RusHydro statement. Pekhtin resigned from Russia’s lower house of parliament in February a week after bloggers published documents showing he owned luxury property in Florida.
The RTS Volatility Index, which measures expected swings in stock futures, jumped 1.4 percent to 21.31, the fifth day of gains. The Market Vectors Russia ETF, the largest dedicated Russian exchange-traded fund, lost 1.7 percent to $26.83 today. The Bloomberg Russia-US Equity Index decreased 0.9 percent to 94.44 in New York today.
Russian equities have the cheapest valuations among 21 emerging markets tracked by Bloomberg. The Micex trades at 5.1 times estimated earnings and has lost 6 percent this year, compared with 10.3 times for the MSCI Emerging Markets Index, which has slid 3.5 percent this year.