Russia’s benchmark gauge fell to a five-week low, extending a fourth-straight monthly drop, as crude oil and power stocks retreated.
The Micex Index declined 0.8 percent to 1,350.17 at the close in Moscow, the lowest level since April 23 and bringing a drop this month to 2.6 percent. Utilities stocks led losses among nine industry groups, sliding 4.4 percent on average. OAO Russian Grids, a power distribution and transmission company, slid the most since May 2012. OAO Lukoil, Russia’s second-largest oil producer with a 15 percent index weighting, slipped 2.3 percent to 1,878.20 rubles.
Crude, Russia’s main export earner, declined 0.9 percent to $92.77 a barrel in New York, set for a third weekly decline, after U.S. stockpiles climbed to the most in more than 80 years. Standard & Poor’s GSCI Index of commodities fell 0.6 percent to 618.50, the third day of losses. Russia’s economy will probably expand 2.3 percent in the second quarter, according to the median estimate of 9 economists in a Bloomberg survey. That’s less than the 2.5 percent forecast a month earlier.
“There’s Russia fatigue in the market,” Bruce Bower, a partner at Verno Capital in Moscow, which manages about $200 million in assets, said by phone. “Commodity prices have come down, which presents a risk for Russia.”
Russian Grids, down 9.6 percent to 1.136 rubles before MSCI Inc.’s removal of the stock from Russia Index takes effect on June 3, has lost 42 percent this year. Lukoil’s global depositary receipts dropped 2.4 percent to $59.10 in London. OAO RusHydro retreated 6.5 percent to 47.12 kopeks, the most since June. The GDRs plunged 5.7 percent to $1.447.
Total fund outflows from Russia in the week ending May 29 reached $267 million, compared with $652 million from Brazil, Sberbank CIB said in an e-mailed note today.
The nation’s economy grew at the weakest pace since 2009 in the first quarter as the euro area’s longest recession hurt demand for commodity exports, federal data showed on May 17. Russia’s central bank kept its main interest rates on hold for an eighth month in May.
President Vladimir Putin “has asked for stimulus measures and I think we’ll see a move soon,” Verno’s Bower said. “In the second half of the year we should see a rate cut.”
The U.S. economy expanded less than previously estimated in the first quarter and more Americans filed claims for unemployment insurance last week, reports showed yesterday.
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 debt a month to support the economy by putting downward pressure on interest rates.
OAO Moscow Exchange, Russia’s biggest bourse, surged 2.8 percent to 54.97 rubles ($80.2 million) after first-quarter net income jumped 21 percent to 2.56 billion rubles. The stock posted a 23 percent advance in the month, the most on the Micex index.
While X5 Retail’s buy recommendations have risen to the highest level since September, analysts surveyed by Bloomberg are the least optimistic on Magnit in more than a year. The stock added 1.1 percent to $19.80 in London today.
OAO Magnit, the best performer on Moscow’s Micex index this year, recorded an eighth month of gains. The increase pushed the Krasnodar-based company’s Moscow-traded shares to 21 times estimated earnings, up from 4.18 times in 2008. Magnit tumbled 2.8 percent to 7,143.60 rubles in Moscow today.
UralSib Capital’s Moscow-based retail analyst Marat Ibragimov recommended switching to X5 and OAO Dixy Group, the country’s third-largest retailer, from Magnit on valuations. X5 is undervalued, he said by phone on May 29. Dixy trades at 17.3 times estimated earnings.
OAO Sberbank, the nation’s biggest lender, lost 1.2 percent to 98.73 rubles, the lowest since April 29. Sberbank fell 2 percent to $12.36 in London.
The volume of shares traded on the Micex was 13 percent above the gauge’s 30-day average, while 10-day price swings subsided to 29.395.
Russian equities have the cheapest valuations among 21 emerging markets tracked by Bloomberg. The Micex trades at 5 times its 12-month estimated earnings and has dropped 8.5 percent this year, compared with a 10.3 multiple for the MSCI Emerging Markets Index, which has retreated 4.4 percent.
The dollar-denominated RTS Index slipped 1.4 percent to 1,331.43. The Russian Volatility Index decreased 0.7 percent to 25.20. The Bloomberg Russia-US Equity Index of the most-traded Russian companies in the U.S. lost 1.6 percent to 88.41.