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Micex Drops From Six-Month High as Fed Outweighs Dividend Plan

Russian stocks fell for the first time in three days, retreating from a six-month high as investors awaited signs on U.S. stimulus.

The Micex Index dropped 0.5 percent to 1,464.95 by the close in Moscow, having risen as much as 0.6 percent earlier after the Finance Ministry said state companies may boost dividends from 2016., Russia’s biggest electronics retailer, slid 1.8 percent to 272.50 rubles. OAO Tatneft, a regional oil producer, fell 2.3 percent to 219.89 rubles.

The Federal Reserve concludes a two-day policy meeting today, with 33 economists surveyed by Bloomberg News predicting it will reduce its buying of Treasuries by $5 billion or less, and 31 forecasting a cut of $10 billion or more. The Micex advanced an average 77 percent during the Fed’s first two rounds of bond buying, and fell 0.6 percent in periods of no stimulus, the biggest difference of 46 emerging and developed markets tracked by Bloomberg.

“Everyone is waiting for the Fed decision, if they end up cutting stimulus more than expected, we may see strong losses,” Sergey Kucherenko, who manages about $50 million in Russian equities at OAO Nomos Bank in Moscow, said by phone.

The Micex’s 14-day Relative Strength Index rose to 71.33 yesterday, above the 70 reading that suggests to some investors a security has been overbought. It closed at 67.36 today. The RSI measures how rapidly prices have advanced or dropped during a specified time period.

Dividend Proposal

Crude oil, Russia’s main export earner, added 0.8 percent to $106.30 in New York, gaining for the first time in four days.

Russian stocks advanced earlier as Finance Minister Anton Siluanov proposed state companies pay out a minimum 35 percent of net income from 2016 based on international accounting standards.

OAO Sberbank, the nation’s largest lender, rose 0.2 percent to 99.62 rubles. OAO Transneft, Russia’s state-run oil pipeline operator, climbed 1.1 percent to 82,200 rubles.

“Psychologically higher dividends are a very positive driver for the market,” Oleg Popov, who manages $1 billion of securities for Allianz Investments, the asset-management arm of Europe’s biggest insurer, said by phone from Moscow. “This boosts the appeal of the Russian market. The main thing is that the dividend increase actually happens because the government has been talking about higher dividends for two years now.”

Russia required state-backed companies pay at least 25 percent of net income as dividends in November, without specifying whether the payouts should be based on Russian or international accounting rules.

Dividends will remain at least 25 percent of net income in the next two years, Siluanov said. Increasing the level to 35 percent may bring an additional 106 billion rubles ($3.29 billion) to the budget, according to the minister.

Alrosa Sale

OAO Alrosa increased 4.1 percent, the biggest Micex advancer, to 35.09 rubles, the highest since December 2011. The world’s largest diamond miner by output plans a 14 percent stake sale in October and will publish a so-called intention to float statement on the last day of this month, two people with direct knowledge of the matter said yesterday, asking not to be identified because the information isn’t public. Alrosa spokeswoman Jane Kozenko declined to comment by phone.

The Micex sank 0.7 percent on Sept. 13 as Russia’s central bank kept the refinancing rate unchanged at 8.25 percent, matching the forecast of 14 out of 22 economists in a Bloomberg survey. Russia’s economy expanded 1.2 percent in the second quarter, the Federal Statistics Service reported on Aug. 9, missing the median estimate for 2 percent.

Russian equities have the cheapest valuations among 21 emerging economies tracked by Bloomberg, with shares trading at 4.2 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 55 percent above the 30-day average, while 10-day price swings slumped to 16.026, the lowest since Sept. 4.

The dollar-denominated RTS Index tumbled 0.7 percent to 1,429.62. The Bloomberg Russia-US Equity Index of the most-traded Russian stocks in New York gained 0.4 percent today, while Market Vectors Russia ETF, the largest dedicated Russian exchange-traded fund, dropped 0.3 percent.

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