Russian stocks retreated to a two-week low as a drop in crude, the country’s main export earner, sent oil companies from OAO Rosneft to OAO Surgutneftegas tumbling.
The Micex Index declined 0.3 percent to 1,502.46 by the close in Moscow, the lowest since Oct. 9. The gauge pared its advance from this year’s June low to 17 percent. Rosneft slid 1.3 percent to 251.20 rubles and Surgutneftegas lost 1.4 percent to 28.46 rubles. OAO Tatneft, a regional oil producer, decreased 1.9 percent, the most in three weeks, to 212.08 rubles.
Brent crude slipped 0.3 percent to $107.43 in London, while crude oil fell 0.4 percent to $96.48 in New York. Russia receives about half its budget revenue from natural gas and oil. Euro-area services and manufacturing output unexpectedly slowed in October, London-based Markit Economics said today. Europe is Russia’s biggest trading partner.
“The fact that European PMI came out weaker than expected isn’t very good news as the Russian market tends to reflect everything that’s going on in the world,” Vadim Bit-Avragim, who helps manage about $4.4 billion at Kapital Asset Management in Moscow, said by phone. “Russian stocks are very closely tied to the oil prices and we’re starting to see a correction.”
Rosneft lost 0.8 percent to $7.90 in London trading, while Surgutneftegas sank by the same percentage to $8.94. More Americans than forecast filed applications for unemployment benefits last week, a Labor Department report showed today in Washington.
OAO Transneft tumbled 1.5 percent to 83,303 rubles. Russia’s state-run oil pipeline operator is considering a second conduit to Asian markets to counter a capacity deficit via the East Siberia-Pacific Ocean crude oil channel, Chief Executive Officer Nikolay Tokarev said today.
The RTS Index dropped less than 0.1 percent to 1,493.85, extending yesterday’s 1.6 percent decline. The dollar-denominated gauge entered a bull market on Oct. 10, rising 20 percent from this year’s low.
Russian equities have the cheapest valuations among 21 emerging economies monitored by Bloomberg, with shares on the Micex trading at 4.3 times projected 12-month earnings, compared with a multiple of 10.7 for the MSCI Emerging Markets Index. Ten-day price swings on the Micex rose to 15.807 from 15.775 yesterday.