Russian stocks dropped for a third day as the country’s biggest companies, including OAO Sberbank and OAO Magnit, fell on concern slowing economic growth will crimp profit.
The Micex Index sank 0.9 percent to 1,374.21 by the close in Moscow, the lowest since Aug. 8. Sberbank, Russia’s largest lender, retreated 1.3 percent to 90.05 rubles, the lowest since June 25. Magnit, the nation’s biggest retailer, tumbled 4.5 percent to 7,457 rubles, the most since January 2012. The two stocks have a combined weight of about 18 percent in the index.
Russia lowered its 2013 economic-growth forecast for the second time this year to 1.8 percent from 2.4 percent, Deputy Economy Minister Andrey Klepach said yesterday. Bank of America Corp. cut Russia’s GDP growth outlook today to 2.5 percent, citing weak second-quarter data. Sberbank, which is scheduled to report earnings tomorrow, held 46 percent of Russia’s deposits last year, according to Deposit Insurance Agency data.
“Major market players are reacting to Russia’s growth forecast cut,” Mark Rubinstein, the head of research at IFC Metropol in Moscow, said by phone.
Sberbank’s global depositary receipts retreated 3 percent to $10.76 in London, the lowest level since Nov. 14. Magnit lost 4.8 percent to $56.15 in London. The MSCI Emerging Markets Index tumbled 1.8 percent on concern that capital outflows will accelerate as Syria’s conflict intensifies and Southeast Asian economies slow.
Shares of OAO Mechel, Russia’s biggest coking coal producer, dropped 2.5 percent to 101.60 rubles. The stock surged to the highest since May 31 yesterday after President Vladimir Putin proposed a 10-year mineral extraction tax break for greenfield coal projects.
Russia’s economy expanded 1.2 percent in the second quarter, the Federal Statistics Service reported on Aug. 9, missing the median forecast of 2 percent of economists surveyed by Bloomberg. That may mean the nation has entered its second recession in five years, according London-based to Capital Economics Ltd.
The central bank refrained from cutting interest rates for an 11th month on Aug. 9, while highlighting “significant” risks to growth.
“Additional downward pressure on the outlook comes from the lack of any monetary policy support,” Vladimir Osakovskiy, an economist for Russia and CIS at Bank of America, said in an e-mailed note today.
Russian equities have the cheapest valuations among 21 emerging economies tracked by Bloomberg at 5.2 times 12-month estimated earnings, compared with a multiple of 9.8 for the MSCI Emerging Markets Index. The dollar-denominated RTS Index fell 1.5 percent to 1,304.33.
Crude oil futures added 2.6 percent to $108.69 a barrel in New York. Brent advanced 2.4 percent to $113.39 a barrel in London. Russia receives about half of its budget revenue from oil and natural-gas sales.
The volume of shares traded on the Micex was 38 percent below the 30-day average today, while 10-day price swings subsided to 16.1, the lowest since Aug. 8, data compiled by Bloomberg show.
The Bloomberg Russia-US Equity Index of the most-traded Russian stocks in New York dropped 1.4 percent to 90.60 today, while the Market Vectors Russia ETF, the largest dedicated Russian exchange-traded fund, fell 0.8 percent to $26.08.