Russian shares fell to the lowest in almost a week as crude sank and OAO Pharmstandard, the nation’s biggest drugmaker, tumbled after Jefferies International Ltd. cut the stock to the equivalent of sell from buy.
The benchmark Micex Index lost 0.4 percent to 1,415.52 by the close in Moscow, after rising 0.5 percent earlier. The dollar-denominated RTS Index retreated 0.2 percent to 1,380.01. OAO Novatek, Russia’s second-biggest natural gas producer, declined 1.9 percent to 357.01 rubles and 2.8 percent to $121.30 in London. Pharmstandard fell 2.7 percent to 1,631.80 rubles in Moscow, the biggest decliner on the Micex, while London shares surged 6.8 percent.
Pharmstandard tumbled 45 percent in London and 34 percent in Moscow from July 8 to July 11 after the company said it offered $630 million for Bever Pharmaceutical Pte Ltd., without disclosing why, and announced the spinoff of its own branded, non-prescription drugs business. The drugmaker completed a $247 million buyback after boosting ownership to 73 percent last week. Crude oil, Russia’s main export earner, dropped 0.7 percent to $107.35 a barrel in New York, erasing earlier gains.
“Last week the company ended its buyback, so the stock has lost its support factor,” Mikhail Krasnoperov, an analyst at Sberbank CIB, said by phone from Moscow.
Russia receives about 50 percent of its budget revenue from oil and natural gas sales. Standard & Poor’s GSCI Index of commodities tumbled 0.4 percent.
Pharmstandard will offer to buy out shareholders who vote against the planned spinoff of its over-the-counter unit for 2,180 rubles a share, equivalent to $16.79 per GDR, the company said. The buyback is capped at 10 percent of the drugmaker’s net asset value and it’s “unlikely” that all dissenting shareholders’ stock will be bought back, according to the Jefferies note.
“We have serious concerns over corporate governance and minority investors’ ability to extract value from recent strategic activity,” Jefferies analysts James Vane-Tempest and Chris Cooper wrote in an e-mailed note today.
The Micex climbed 1.7 percent last week on speculation the U.S. Federal Reserve will keep stimulus in place. Russia’s equities trade at the cheapest valuations based on estimated earnings among 21 emerging economies tracked by Bloomberg.
OAO Sberbank, Russia’s biggest lender, fell 2.1 percent to 97.84 rubles. The stock dropped 1.7 percent to $12.14 in London.
OAO Magnit, the nation’s biggest food retailer, jumped 1.4 percent to 7,802.20 rubles, the highest since July 2006, when the stock was listed. The London stock surged 1 percent to $58.20. The retailer will publish unaudited second-quarter and first-half results tomorrow.
“The market is expecting positive results from Magnit,” Maria Kolbina, an analyst at VTB Capital, said by phone. “This is a serious trigger for the stock’s growth.”
Magnit is the best performer on the Micex this year with a 62 percent gain. OAO Sberbank, Russia’s biggest lender, fell 2.1 percent to 97.84 rubles today. The stock lost 1.7 percent to $12.14 in London.
The volume of shares traded on the Micex was 43 percent below the 30-day average, data compiled by Bloomberg show, while 10-day price swings climbed to 20.82. The 50-member Micex’s 4 percent decline in 2013 compares with a 3.8 percent increase for India’s benchmark Sensex Index and Brazil’s Ibovespa Index’s 21 percent loss.
The 14-day relative strength index on the Micex climbed to 63.8 from 66.1 on July 19. The RSI measures how rapidly prices have advanced or dropped during a specified time period. Readings below 30 indicate a security may be poised to rise, while those above 70 signal a potential drop.
Thirty-eight stocks, or 76 percent, were trading above their 50-day moving average on the Micex on July 19. None closed at a 52-week low and one at a 52-week high, according to data compiled by Bloomberg. The Russian Volatility Index, which measures expected swings in RTS futures, was little changed. The Bloomberg Russia-US Equity Index of the most-traded Russian companies in the U.S. was little changed at 92.56 today.
The Micex trades at 5.3 times its 12-month estimated earnings, compared with a multiple of 10 for the MSCI Emerging Markets Index.