Russian stocks fell for a sixth day after worse-than-expected U.S. data and as Templeton Emerging Markets Group’s Mark Mobius called for better treatment of minority shareholders.
The Micex Index closed down less than 0.1 percent at 1,335.21 in Moscow, the lowest level since June 25 after rebounding as much as 1.1 percent earlier. Utilities dropped the most on the gauge, losing 1.4 percent. Russian equities have the cheapest valuations among 21 emerging markets tracked by Bloomberg.
Russia’s benchmark gauge erased gains as crude, the country’s main export, fell after an index of U.S. leading indicators declined for the first time in seven months. Igor Sechin, chief executive officer of OAO Rosneft, has said the company has no plans to buy out minority shareholders in OAO TNK-BP Holding, the traded unit of the oil company it acquired last month, and may end the company’s dividend policy.
Rosneft’s treatment of minorities was “very instructive,” Mobius said today at an investment forum in Moscow, organized by OAO Sberbank, Russia’s biggest lender. “You have oligarchs leave with billions of dollars, while minority investors are now sitting in a very risky, unstable situation.”
Rosneft became the world’s largest oil producer by output when it closed the $55 billion acquisition of TNK-BP, Russia’s third-largest oil producer, from BP Plc and a group of billionaires.
TNK-BP, which isn’t in the 50-stock Micex Index, surged as much as 8.7 percent today on Mobius’s comments, then jumped again when First Deputy Prime Minister Igor Shuvalov told investors that Rosneft will tackle the issues faced by minorities. It closed up 3.2 percent at 44.50 rubles. Rosneft dropped 0.5 percent to 213.31 rubles.
While Russian President Vladimir Putin has pledged to turn Moscow into an international financial hub, resolving the minority dispute would signal that the local market is developing, Masha Gordon, equity fund manager at Pacific Investment Management Co LLC, said in an interview at the conference.
Russia “generates more negative publicity than any other country we operate in,” TPG Capital founder David Bonderman told a conference panel.
Crude, Russia’s chief export, surged as much as 1.7 percent before trading little changed at $86.55 per barrel in New York. The Micex’s 14-day relative strength index was at 19.9. A value below 30 signals the gauge is oversold and may be due for a rebound.
An 11 percent slump in oil has driven the Micex down 7.2 percent this month. Oil and gas sales account for about 50 percent of government revenue.
Shuvalov said the market drop is cause for “some concern.” He ruled out using economic stimulus to revive the economy at the expense of the inflation rate, which is at a three month low. Economy Minister Andrei Belousov warned of a recession last week after cutting this year’s growth forecast to 2.4 percent from 3.6 percent.
“Everything depends on oil and commodities prices,” Vladimir Savov, an equities strategist at Otkritie Capital in Moscow, said by phone. “The risks of a further downturn remain.”
The Micex trades at 5 times estimated earnings and has lost 8.8 percent this year, compared with 10.4 times for the MSCI Emerging Markets Index, which has slid 5.5 percent in the period.
The S&P GSCI Spot Index of commodities added 0.7 percent. The dollar-denominated RTS Index lost less than 0.1 percent to 1,327.55. Oil producer OAO Surgutneftegas increased 1.9 percent to 26.95 rubles.
OAO PhosAgro closed up 2.8 percent at 1,225.50 rubles. The fertilizer producer offered 6,880 rubles for each ordinary share of Apatit and 5,504 rubles for each preferred share, according to an Apatit filing. PhosAgro controls 96 percent of Apatit.
The RTS Volatility Index, which measures expected swings in stock futures, dropped 0.7 percent to 24.34 today. The Market Vectors Russia ETF, the largest dedicated Russian exchange-traded fund, rose 0.4 percent to 25.56, while the Bloomberg Russia-US Equity Index added 0.4 percent to 89.69.
“Treatment of minority shareholders is really an extension of the treatment of people in general,” Mobius said. “So this is really important.”