Russian equities dropped the most in four weeks as crude oil declined and the preferred shares of OAO Surgutneftegas slumped to five-month low. The central bank left its main interest rates unchanged today.
The Micex gauge retreated 1 percent to 1,391.98 by the close in Moscow, the most since April 17. Preferred shares of oil producer Surgutneftegas, which traded without the right to receive a dividend today, lost 10 percent to 19.559 rubles, the most on the index and the lowest level since Nov. 27.
Crude oil, Russia’s chief export earner, slipped for the fifth day in New York, trading down 1.8 percent at $92.49 a barrel. Russia receives about half of its budget revenue from oil and natural gas sales. Bank Rossii held the refinancing rate at 8.25 percent for an eighth month at a meeting in Moscow today, as forecast by 18 economists in a Bloomberg survey.
“Dividend declaration and ex-dates are mostly dragging the market down,” Bruce Bower, a partner at Verno Capital in Moscow, which manages about $200 million, said by phone. “Oil has been dropping lately. People are hoping for a long time that the CBR would cut.”
Investors had to own Surgut stock before today to receive the dividend payout, which traders deduct from the company’s share price on the ex-dividend date. American Depositary Receipts slumped 5.6 percent to $6.24 in New York.
Outgoing Bank Rossii Chairman Sergey Ignatiev has limited room for policy easing with inflation more than a percentage point above target, putting him at odds with an international push for monetary stimulus this month. The annual inflation rate was at 7.2 percent as of May 13, the regulator said in its statement today.
VTB Group, Russia’s second-biggest lender, retreated 1.6 percent to 4.54 kopeks, the lowest since April 26. The stock rose 12 percent from April 29 -- when it announced investors agreed to buy all $3.3 billion of shares it’s selling to increase capital -- through May 8. The depositary receipts sank 2 percent to $2.89 in London.
The pre-emptive rights offering for VTB’s local shares closes on May 17, Luis Saenz, the head of equity sales and trading at BCS Financial Group said in an e-mailed note on May 13. The offering closed yesterday for its depositary receipts, he said.
OAO Mechel, Russia’s biggest coking coal producer, declined 5.4 percent to 116.30 rubles. The American depositary receipts lost 3.2 percent to $3.69 today. MSCI Inc. may cut the company’s depositary receipts from its Russia Index, according to an e-mailed note from VTB Capital on April 29. Most metals tumbled in London, including nickel and copper.
MSCI will announce the results of its semi-annual index rebalancing for the Russia index today after the market closes, with changes scheduled to take effect on June 3.
OAO Sollers, Russian partner of Ford Motor Co., advanced as much as 5.5 percent, increasing 4.9 percent to 734.30 rubles, the most on the Micex. The Ford Sollers venture will build the EcoSport SUV in the second half of 2014 and as many as 105,000 engines a year at the factory beginning in December 2015, both in Russia’s Tatarstan region, according to a statement released yesterday after the market close.
The number of shares traded on the Micex was 33 percent above the gauge’s 30-day average, while the index’s 10-day price swings subsided to 17.436.
Russian equities have the cheapest valuations among 21 emerging markets tracked by Bloomberg. The Micex trades at 5.2 times its 12-month estimated earnings and has lost 5.5 percent this year, compared with a 10.5 multiple for the MSCI Emerging Markets Index, which has dropped 0.9 percent in the period.
The dollar-denominated RTS Index fell 1.5 percent to 1,391.01. The RTS Volatility Index, which measures expected swings in stock futures, surged 3.9 percent to 21.40. The Bloomberg Russia-US Equity Index of the most-traded Russian companies in the U.S. slipped 1.1 percent to 93.32 today. The Market Vectors Russia ETF, the largest dedicated Russian exchange-traded fund, tumbled 1.3 percent to 26.95 in New York.