Russian shares erased gains as metal producers followed commodities lower after Chinese data trailed estimates. Bank Rossii left its main interest rates unchanged.
The Micex Index fell 0.6 percent to 1,335.25 by the close in Moscow after rising 1 percent earlier. OAO Severstal, Russia’s second-largest steelmaker, tumbled 5.3 percent to 224.80 rubles, the lowest since November 2009. OAO Novolipetsk Steel declined 3.4 percent to 42.83 rubles, the lowest since April 2009.
The Standard & Poor’s GSCI gauge of 24 raw materials retreated 0.5 percent after weekend data showed China’s industrial production rose a less-than-forecast 9.2 percent last month, while export gains were at a 10-month low and imports dropped. Russian central bank Chairman Sergey Ignatiev, who presided today over his last policy meeting after leading the regulator for more than a decade, kept key rates on hold for a ninth month.
“People are still going to be worried about downside economic risks in Russia given that the CBR is being too tight and too slow to cut rates,” Bruce Bower, a partner at Verno Capital in Moscow, which manages about $200 million in assets, said by e-mail today. “In the future it will be more dovish, because it’s mandate is shifting away from just inflation fighting to also boosting growth.”
The dollar-denominated RTS Index, which last week entered a bear market, declined 1.1 percent to 1,300.54. On the Micex, 19 stocks increased while 31 dropped. The volume of shares traded on the gauge was 34 percent below the 30-day average, while 10-day price swings subsided to 20.23.
Bank Rossii’s refinancing rate was held at 8.25 percent, the regulator said in a statement on its website. That matched the median estimate in a Bloomberg survey of 26 economists, with four predicting a quarter percentage point cut. Inflation in Russia accelerated for a second month in May to the fastest pace in 21 months, according to data last week.
The rates decision means that completing an easing cycle Ignatiev announced in April will fall to his successor, Kremlin economic aide Elvira Nabiullina, who takes over in two weeks.
“Of course, lower rates would’ve been viewed with more enthusiasm by the stock market, but considering the situation in the Russian economy, slower growth, high inflation, the stock market is looking at those fundamental factors rather than just at today’s decision,” Alexander Morozov, chief economist for Russia at HSBC Holdings Plc in Moscow, who forecasts a 25 basis point cut for all key rates next month and in October, said by phone. “We’re expecting good inflation statistics for June and this could give the central bank an opportunity to cut rates next month.”
Most metals retreated in London. OAO Magnitogorsk Iron & Steel, the company owned by Russian billionaire Victor Rashnikov, advanced 0.8 percent to 7.399 rubles as UBS AG raised the stock to buy on valuations. OAO Mechel rebounded from earlier losses, gaining the most on the Micex with a 2.7 percent advance to 97.80 rubles.
OAO Magnit jumped 1.1 percent to 7,000 rubles after posting a 34 percent increase in May sales from a year earlier. The shares climbed 1.5 percent to $54.05 in London.
The Micex tumbled the most in a year on May 23, the day after Federal Reserve Chairman Ben S. Bernanke suggested the central bank could curtail its bond buying if the job market improves in a “real and sustainable way.” The Fed buys $85 billion of debt a month to support the economy by putting downward pressure on interest rates.
Russia’s Economy Ministry lowered this year’s growth forecast to 2.4 percent from 3.6 percent in April.
Crude, which together with natural gas contributes about 50 percent of Russia’s budget revenue, traded down 0.2 percent at $95.89 a barrel following a 1.3 percent jump to $96.03 on June 7 after data showed U.S. employers added more workers than expected to payrolls.
Brent for July settlement fell 0.2 percent to $104.32 a barrel on the London-based ICE Futures Europe exchange. Urals crude, Russia’s major export blend, declined 0.7 percent to $103.36.
The country’s equities have the cheapest valuations among 21 emerging markets tracked by Bloomberg. The Micex trades at 5 times its 12-month estimated earnings, having lost 9.5 percent this year, compared with a multiple of 10 for the MSCI Emerging Markets Index, which is down 7.8 percent.
The Russian Volatility Index surged 11 percent to 28.14. The Bloomberg Russia-US Equity Index of the most-traded Russian companies in the U.S. fell 0.6 percent to 86.59 today.