Russian equities fell the most in two weeks as crude oil, the nation’s chief export earner, retreated and OAO Mechel, the biggest coking coal producer, sank as output decreased.
The Micex Index dropped 0.7 percent to 1,416.50 by the close in Moscow, having gained 1.3 percent last week. Consumer goods and basic materials stocks slid the most among nine industry groups. Mechel retreated 4.7 percent to 126.60 rubles, the most since April 17.
Crude oil fell for a third day, the longest run of declines in four weeks, losing 1.4 percent to $94.72 a barrel in New York as OPEC boosted output to the highest level in five months. Mechel tumbled the most on the index as total coal production fell 8 percent in the first quarter from the previous period, according to a statement today.
“Investors are disappointed in the Russian market,” Alexei Yazikov, head of research at Aton Capital LLC, said by phone from Moscow. “The market has a high dependency on oil prices. There’s little hope that oil can rise further from current levels. ”
OAO Gazprom, Russia’s biggest natural gas export monopoly, closed down 2.3 percent at 129.61 rubles, the most since April 11.
VTB Group decreased 3.4 percent to 4.80 kopeks, paring gains since announcing investors agreed to buy all $3.3 billion of the shares it’s selling to increase capital. The stock rose 9.4 percent from the sale announcement on April 29 through May 10.
The pre-emptive rights offering for VTB’s local shares closes on May 17 and tomorrow for its depositary receipts, Luis Saenz, head of equity sales and trading at BCS Financial Group, said in an e-mailed note today. VTB’s depositary receipts declined 2.5 percent to $3.002.
“With VTB, we’re seeing a mid-term correction,” Natalia Berezina, an analyst at UralSib Capital, said by phone from Moscow. “A lot of people were buying the stock on the SPO news, now they’re taking a break.”
MSCI Inc. is due to announce the results of its semi-annual index rebalancing for its Russia index on May 15. VTB’s weighting may be raised because of the share sale, triggering capital inflows into the stock, according to Berezina.
OAO Lukoil increased 0.8 percent to 2,050.30 rubles in Moscow after Goldman Sachs Group Inc. named the company its top pick in the region’s energy sector. Lukoil added 1.6 percent to $64.15 in London.
Russian equities have the cheapest valuations among 21 emerging markets tracked by Bloomberg. The Micex trades at 5.3 times 12-month estimated earnings and has lost 4 percent this year, compared with a 10.5 multiple for the MSCI Emerging Markets Index, which has dropped 1 percent in the period.
The dollar-denominated RTS Index retreated 0.5 percent to 1,422.29. The RTS Volatility Index, which measures expected swings in stock futures, added 0.3 percent to 20.61. The Market Vectors Russia ETF, the largest dedicated Russian exchange-traded fund, slid 1.1 percent to $27.31 in New York today.
The number of shares traded on the Micex was 13 percent below its 30-day average, while the gauge’s 10-day price swings rose to 18.075.