Russian shares sank to the lowest level in more than a month as oil dropped and OAO Russian Grids fell before its removal from a benchmark gauge.
The Micex Index decreased 2.6 percent to 1,361.43 by the close in Moscow, the weakest since April 23. OAO Tatneft, an oil producer, lost 5.3 percent to 190.95 rubles. Russian Grids, a power distribution and transmission company, fell 5.2 percent to 1.301 rubles.
MSCI Inc. said this month it will remove Russian Grids, which has tumbled 34 percent this year, from its Russia Index. Investors who track the measure must sell the stock when the changes come into effect June 3. Crude, Russia’s main export earner, declined 0.6 percent to $94.45 a barrel in New York and emerging-market stocks retreated on wagers the U.S. will scale back stimulus.
“Speculators are selling Russian Grids before the MSCI rebalancing,” Alexander Kostyukov, an analyst at Veles Capital in Moscow, said by phone. “Russia depends on foreign investments and the thought of the U.S. curbing its stimulus program scares the market.”
The Micex tumbled the most in a year on May 23, the day after U.S. Federal Reserve Chairman Ben S. Bernanke said the central bank could reduce the pace of its asset purchases if officials see signs of sustained improvement in growth. The Fed buys $85 billion of Treasury and mortgage debt a month to support the economy by putting downward pressure on interest rates.
OAO Sberbank, Russia’s largest lender with the second-biggest weighting on the Micex, slumped 3.9 percent to 99.98 rubles, the lowest level since April 30.
Sberbank posted a better-than-forecast 3.9 percent drop in net income to 88.6 billion rubles ($2.8 billion) in the first quarter from a year earlier, according to a statement today. The central bank kept its main interest rates on hold for an eighth month in May.
“Russian market participants expected the nation’s central bank to cut rates this month,” Kostyukov said. “But this didn’t happen and there are no other growth triggers.”
Andrey Kostin, chief executive officer of VTB Group, Sberbank’s smaller rival, appealed to policy makers in a May 22 interview to cut interest rates to help encourage lending amid Russia’s slowest expansion since a 2009 contraction.
Lowering the refinancing rate to between 5 percent and 6 percent from 8.25 percent would allow banks to reduce loan costs and make “a big difference for the industry,” Kostin said. Both VTB and Sberbank are majority-owned by the Russian state.
The volume of shares traded on the Micex was 22 percent below the 30-day average, while 10-day price swings increased to 32.224, the highest since May 2012.
Tatneft’s global depositary receipts led declines on the Russian Depositary Index, losing 5 percent to $36.82.
PIK Group fell 3.3 percent to 63.03 rubles, the most since March 18. The Russian residential developer snapped six days of gains after announcing a 22.7 billion ruble offering of new shares at 62.5 rubles apiece today. The number of shares traded was 2.9 million, equivalent to about 9.2 times the three-month average.
The Micex rallied 1.4 percent yesterday, climbing for the first time in four days, after U.S. data showed home prices rose in the 12 months through March by the most in seven years and consumer sentiment climbed more than forecast.
Russian equities have the cheapest valuations among 21 emerging markets tracked by Bloomberg. The Micex trades at 5.1 times its 12-month estimated earnings and has lost 7.7 percent this year, compared with a 10.9 multiple for the MSCI Emerging Markets Index, which has dropped 3.3 percent in the period.
The dollar-denominated RTS Index decreased 2.8 percent to 1,360.06. The Russian Volatility Index surged 11 percent to 25.18. The Bloomberg Russia-US Equity Index of the most-traded Russian companies in the U.S. declined 1.7 percent to 89.87.