Russian stocks fell, with prices dropping to the cheapest level in four years relative to emerging-market peers, as crude traded close to a four-month low and the International Monetary Fund cut the nation’s growth forecast.
The Micex Index slipped for a fifth day, down 1.2 percent at 1,335.89 by the close in Moscow, the lowest level since June 25. The measure has slumped 15 percent from this year’s high reached on Jan. 28. Trading was 38 percent above the gauge’s 30-day average volume, while 10-day price swings rose to 15.1.
Crude, Russia’s chief export, slid 1.5 percent to $87.43 per barrel in New York. The IMF cut its global economic growth forecast for 2013, reducing Russia’s outlook to 3.4 percent from 3.7 percent predicted in January, according to a report yesterday.
“We’re entering a declining trend,” Sergey Kucherenko, who manages about $50 million in Russian equities at Nomos Bank in Moscow, said by phone. “Many investors are saying that the commodities growth cycle is over.”
The benchmark Micex gauge is valued at 0.7 times net assets, compared with 1.6 for the MSCI Emerging Markets Index, the biggest gap since February 2009, according to data compiled by Bloomberg. The measure’s 14-day relative strength index fell to 20 today. A value below 30 signals the gauge is oversold and may be due for a rebound.
The IMF reduced the Euro-area outlook to a 0.3 percent contraction from a 0.2 percent contraction forecast in January. Europe is Russia’s biggest trade partner.
The world’s biggest energy exporter is probably already in recession as demand for commodities falters amid a global slowdown, Ksenia Yudaeva, President Vladimir Putin’s representative to the Group of 20 nations, said yesterday. Putin has called for a plan to revive Russia’s flagging economy after policy makers reduced the 2013 growth prediction to 2.4 percent from 3.6 percent as oil and metals prices decline.
The S&P GSCI Spot Index of commodities slipped 1.1 percent. The dollar-denominated RTS Index lost 2.1 percent to 1,327.92.
Most metals fell in London, including tin, nickel and copper. OAO Mechel, Russia’s steelmaker and biggest coking-coal producer, dropped 6.2 percent to 120.60 rubles. OAO Severstal, a steelmaker, slid 2.7 percent to 238.50 rubles in Moscow. The company’s depositary receipts lost 2.9 percent to $7.545 in London, adding to a slump in the Russian Depositary Index, which fell 2 percent.
OAO Rostelecom, the country’s biggest fixed-line phone operator, retreated 1.9 percent to 105.63 rubles, a third day of declines. A sale of shares by stock option program participants may be behind the slide, Luis Saenz, the head of equity sales and trading at BCS Financial Group in London, wrote in an e-mail to clients yesterday. Rostelecom managers are selling shares, Vedomosti said today, citing former Rostelecom general director Anton Kolpakov. The company’s spokeswoman Irina Zhabrova declined to comment on the Vedomosti report.
The phone operator’s depositary receipts slumped 2.8 percent to $20.15 in London, dropping for a fourth day.
OAO Surgutneftegas, an oil producer, fell 3 percent to 26.444 rubles, with trading at about 136 percent of the stock’s three-month average.
The RTS Volatility Index, which measures expected swings in stock futures, jumped 5.3 percent to 24.39. The Market Vectors Russia ETF, the largest dedicated Russian exchange-traded fund, fell 2.4 percent to 25.57 yesterday, while the Bloomberg Russia-US Equity Index dropped 1.7 percent to 89.51. Both gauges increased for the first time in four days yesterday.
Russian equities have the cheapest valuations among 21 emerging markets tracked by Bloomberg. The Micex trades at 5 times estimated earnings and has lost 9.4 percent this year, compared with 10.4 times for the MSCI Emerging Markets Index, which has slid 4.1 percent in the period.