Russia’s Micex Index sank the most in more than a week as commodities slumped after the U.S. Federal Reserve said it may curb stimulus this year, paring appetite for stocks in the world’s biggest energy exporter.
The benchmark lost as much as 2.3 percent before closing down 2 percent at 1,297.01 in Moscow. The Russian Volatility Index climbed 14 percent to 32.90, the biggest jump since May 23. OAO Sberbank, the nation’s largest lender, dropped 3.4 percent to 91.37 rubles, the lowest since Nov. 29. VTB Group declined 4 percent to 4.697 kopeks.
Standard & Poor’s GSCI Commodities Index slumped 2.7 percent, the most since Sept. 17, after Fed Chairman Ben S. Bernanke said the regulator will probably taper its $85 billion in monthly bond buying later in 2013 and halt purchases around mid-2014 if the world’s largest economy performs in line with projections. More than $2 trillion has been lost from global markets since May 22, when Bernanke signaled the asset-buying program may be trimmed.
“We might see new lows” before stock prices start recovering, Victor Bark, who oversees about $2.8 billion as the head of asset management at Alfa Capital in Moscow, said by phone. “The market is overreacting to the Fed comments, at some point in the next few days we’ll see a rebound.”
The conclusion to record U.S. stimulus may take years to complete as the Fed’s forecasts showed most officials don’t expect to begin raising the benchmark lending rate out of its lowest-ever range of zero to 0.25 percent until 2015.
Commodities also dropped after a report showed China’s manufacturing shrank at a faster pace this month. Crude oil, Russia’s chief export earner, declined 2.8 percent to $95.54, the second day of declines. Brent for August settlement tumbled 3 percent to $102.90 a barrel in London. Urals crude lost 0.5 percent to $104.48.
Most metals fell in London. OAO Novolipetsk Steel retreated 3.5 percent to 41.67 rubles, the most since May 23, and plunged 6.2 percent to $12.61 in London, the lowest since April 2009. OAO Severstal declined 3.7 percent to 217.60 rubles. Global depositary receipts retreated 5.2 percent to $6.60.
Russia is the “best” emerging market in the region, Renaissance Capital said in an e-mailed note today, citing valuations and low dependence on portfolio inflows to fund the current-account deficit. Further triggers could include an increase in growth in the second half of this year and potential for a government “reshuffle,” according to the note.
Russia’s economy grew 1.6 percent in the first three months, decelerating for a fifth quarter and missing the medium-term target of 5 percent set by Prime Minister Dmitry Medvedev, the slowest pace since 2009.
Sberbank tumbled 5.2 percent to $11.11 in London. VTB dropped 5.6 percent to $2.852, the most since March 18.
Bank Rossii held its refinancing rate at 8.25 percent on June 10. 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.
The dollar-denominated RTS Index, which entered a bear market on June 5, dropped 3.8 percent to 1,243.32, the most since May 23. Financial stocks were the biggest decliners among nine industry groups on the Micex, trading down 3.5 percent on average. Russia’s stocks have the cheapest valuations among 21 emerging markets tracked by Bloomberg.
OAO Mechel, a steelmaker and Russia’s biggest coking-coal producer, surged 3.6 percent to 100.70 rubles, the biggest advancer. The company on June 18 said it plans to buy back as much as $100 million in American depositary receipts.
Six stocks increased and 44 dropped on the Micex. The volume of shares traded on the gauge was 18 percent below the 30-day average, while 10-day price swings surged to 28.095, the highest since May 31.
The Micex trades at 4.9 times its 12-month estimated earnings, having lost 12 percent this year, compared with a multiple of 9.3 for the MSCI Emerging Markets Index, which is down 14 percent.
The Bloomberg Russia-US Equity Index of the most-traded Russian companies in the U.S. dropped 2.3 percent to 83.13 today.