OAO Mobile TeleSystems, Russia’s largest mobile-phone company, fell to the lowest level in more than a week as funds sold the stock on bets MSCI Inc. will cut its weighting in a benchmark gauge.
MTS retreated 1.4 percent to 261.65 rubles by the close in Moscow, the lowest since May 16. The number of shares traded was equivalent to about 51 percent of the three-month average. U.S. and U.K. markets are closed today for a public holiday.
MSCI will annouce it’s cutting the combined weighting of MTS’s American depositary receipts and AFK Sistema’s global depositary receipts to 4.5 percent from 9 percent in the Russia 10/40 Index after the market close today, according to an e-mailed note from VTB Capital today. The rebalancing will take effect June 3. OAO Magnit’s GDRs will be lifted to a 9 percent weighting, replacing the two stocks in the gauge’s top four. That may trigger $251 million of outflows from MTS, $59 million from Sistema and $331 million of inflows to Magnit, VTB said.
“The expected announcement tonight may be one of the factors behind the stock’s decline,” Ilya Piterskiy, an analyst at VTB Capital, which manages about 90 billion rubles ($2.9 billion), said by e-mail today. “For funds that track the index, a sharp cut in MTS’s weighting can be a signal to sell.”
Sistema dropped 0.8 percent to 26.90 rubles in Moscow. Magnit surged 48 percent in Moscow this year, Sistema added 5.8 percent and MTS increased 6.4 percent.
While New York and London trading is closed today, many funds hold Moscow-listed MTS shares in their portfolios, Piterskiy said.