Russia Stocks Fall First Time in Nine Days as Utilities Retreat

Sept. 12 (Bloomberg) -- Russian stocks snapped the longest streak of gains since 2010 as a technical indicator showed the benchmark gauge may be overbought and power companies sank.

The Micex Index lost 0.3 percent to 1,450.23 by the close in Moscow, its first fall in nine days. The gauge’s 14-day Relative Strength Index rose to 70.8 yesterday, the highest since Jan. 28, signaling a possible drop. OAO Russian Grids tumbled 3.5 percent to 1.037 rubles, the biggest decliner by percentage points, while Federal Grid Co. retreated 3.1 percent to 10.579 kopeks. Utilities slid 1.9 percent on average.

The Economy Ministry, which is seeking ways to curb consumer-price growth and spur expansion, has proposed freezing utilities’ prices next year. President Vladimir Putin supported the measure at a budget meeting yesterday, Economy Minister Alexei Ulyukayev told reporters.

“The market is overbought, investors expect stocks to roll back,” Andrey Vashevnik, chief investment officer for Russian markets at R&B Russia Investment Fund Ltd, said by phone. “The lack of clarity on what’s going to happen to utilities’ tariffs is causing the stocks to fall.”

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 retreat. The Micex surged 4.3 percent last week, the most since December 2011.

VTB Earnings

VTB Group retreated 0.9 percent to 4.42 kopeks, losing 0.2 percent to $2.704 in London. Russia’s second-biggest lender posted net income in the second quarter of 12.6 billion rubles ($385 million), compared with an average analyst estimate for 15.4 billion rubles, according to a Bloomberg survey.

OAO Mechel, Russia’s largest producer of coal for steelmakers, advanced 2.5 percent to 114.30 rubles, the highest level since May 28.

OAO Dixy Group, Russia’s third-largest food retailer, jumped 4.6 percent to 423.50 rubles, the strongest advance on the Micex. The company posted a 24 percent increase in August retail sales from a year earlier to 14.7 billion rubles, according to a statement today.

M.video added 2.6 percent to 276.99 rubles. Russia’s biggest electronics retailer surged after its board agreed to pay a dividend of 13.8 rubles a share.

Russia’s central bank will keep the refinancing rate unchanged at 8.25 percent at a meeting in Moscow tomorrow, according to 14 out of 22 economists in a Bloomberg survey. Eight forecast a cut to 8 percent. The main lending and deposit rates will also stay unchanged, two separate surveys show.

Cheapest Valuations

Russia’s economy expanded 1.2 percent in the second quarter, the Federal Statistics Service reported on Aug. 9, missing the median forecast for 2 percent. The central bank refrained from cutting interest rates for an 11th month on Aug. 9, while highlighting “significant” risks to growth.

Crude oil, Russia’s main export earner, added 0.5 percent to $108.05 a barrel in New York ahead of talks between the U.S. and Russia to aimed at resolving the crisis in Syria. The conflict has stoked concern Middle Eastern oil supplies may be disrupted.

Russian equities have the cheapest valuations among 21 emerging economies tracked by Bloomberg, with shares trading at 3.8 times 12-month estimated earnings, compared with a multiple of 10.5 for the MSCI Emerging Markets Index.

The volume of shares traded on the Micex was 109 percent above the 30-day average, while 10-day price swings subsided to 19.126.

The dollar-denominated RTS Index added 0.5 percent to 1,401.46, the highest since May 22. The Bloomberg Russia-US Equity Index of the most-traded Russian stocks in New York fell 0.3 percent today, while the Market Vectors Russia ETF, the largest dedicated Russian exchange-traded fund, lost 0.3 percent.

To contact the reporter on this story: Ksenia Galouchko in Moscow at kgalouchko1@bloomberg.net

To contact the editor responsible for this story: Wojciech Moskwa at wmoskwa@bloomberg.net