Russian stocks fell for the worst monthly drop in six as the nation’s biggest coking-coal producer OAO Mechel extended its steepest rout on record for the period.
The Micex Index closed little changed at 1,479.35 in Moscow, with 31 stocks down and 19 up. OAO Novorossiysk Commercial Sea Port slumped 5.2 percent to 2.9986 rubles, the biggest decline on the benchmark in percentage terms. Mechel decreased as much as 4.5 percent while state-run power company OAO Inter RAO UES surged 5.9 percent after JPMorgan Chase & Co. raised the stock to the equivalent of buy.
Russian stocks lost 2 percent this month after adding more than 10 percent in September and October amid concern an economic recovery is foundering. Growth will likely miss the government’s 1.8 percent goal in 2013, a pace that would mark the weakest expansion since the recession in 2009, Economy Minister Alexei Ulyukayev said Nov. 13. Russia-dedicated equity fund outflows are set for the worst year on record, with redemptions reaching more than $130 million in the week ended Nov. 27, according to a UralSib Capital note.
There was a “correction in the market this month after good growth” in the previous two, Mark Rubinstein, head of research at IFC Metropol, said by phone from Moscow. “The market will renew its growth in December.”
Mechel along with power stocks Inter RAO, OAO Russian Grids and Federal Grid Co. are this month’s worst performers on the nation’s benchmark index.
MSCI Inc.’s Russia Utility index has plunged 52 percent this year on concern earnings will suffer from a tariff freeze in 2014. Mechel’s shares fell 41 percent on Nov. 13, the biggest drop since at least 2008. The stock retreated 1.7 percent to 59.30 rubles today, taking a decline this month to 43 percent.
“Utilities stocks will continue falling for another two-three months because of the tariff freeze and uncertainty in the government regulation of the sector,” Metropol’s Rubinstein said. “Power stocks aren’t favored by investors.”
OAO Alrosa added 2.2 percent to 35 rubles. The world’s largest diamond producer said today it will pay more than 35 percent of consolidated net income as dividends.
Regional oil producer OAO Tatneft lost 1.1 percent to 202.81 rubles. Third-quarter net dropped 14 percent to 23.2 billion rubles ($701 million) from a year earlier, the company said today.
The RTS Index decreased 0.3 percent to 1,402.93. Russia’s equities have the cheapest valuations among 21 emerging economies monitored by Bloomberg, with shares on the benchmark trading at 4.2 times projected 12-month earnings, compared with a multiple of 10.7 for the MSCI Emerging Markets Index.