Russian stocks fell to the lowest since September as OAO Gazprom retreated on concern closer ties with Ukraine will hurt earnings and steelmakers dropped amid lower metal prices.
The Micex Index lost 1.7 percent to 1,448.84 by the close in Moscow, the lowest level since Sept. 13. Gazprom, the nation’s natural gas export monopoly, slid 2.1 percent to 138.60 rubles. Aluminum producer United Co. Rusal declined 6.2 percent to 89.34 rubles, while OAO Novolipetsk Steel dropped 3.2 percent to 52.08 rubles.
Gazprom fell amid the biggest political protests since 2004 in Ukraine, a key route for natural gas shipments to the European Union. Russia will offer cheaper natural gas to its neighbor if Kiev opts to join a Moscow-led economic bloc after halting free-trade talks with the EU, First Deputy Prime Minister Igor Shuvalov said in an interview last month. Most metals, including nickel, tin and lead, dropped in London.
“The Ukrainian debacle is definitely weighing on Gazprom’s share price,” Julian Rimmer, a trader at CF Global Trading UK Ltd., said by e-mail from London.
Gazprom tumbled 2.3 percent to $8.33 by 3 p.m. in London, the lowest intraday level since Sept. 6. While Ukrainian President Viktor Yanukovych reiterated that the country’s goal is European integration, his about-face on the EU agreement has sparked the biggest street protests since the 2004 Orange Revolution.
Russian stocks fell 2 percent last month, the worst drop since May, amid concern an economic recovery in the world’s biggest energy exporter is foundering. The 14-day relative strength index tumbled to 34.65 today from 41.81 yesterday. The level of 30 signals a security is oversold.
Speculation the U.S. will start to pare stimulus sooner than expected is hurting the outlook for metal prices, Boris Krasnojenov, an analyst at Renaissance Capital Ltd. in Moscow, said by phone.
“The coking coal price has been falling and there are serious expectations that iron ore prices will drop in the near future,” he said. “There are fears that the U.S. tapering will start sooner than expected, this would damage commodity prices.”
OAO Mechel, Russia’s biggest coking coal producer, added 2.1 percent to 59 rubles after tumbling as much as 4.5 percent earlier. The company with about $9.55 billion in net debt as of June won a waiver from a group of banks, including ING Bank NV, Societe Generale SA and UniCredit SpA, to delay payments on a $1 billion loan until 2015 and 2016.
OAO Novorossiysk Commercial Sea Port declined 5.7 percent to 2.8901 rubles. OAO Rosneft, the nation’s largest oil producer, is ready to buy Russia’s stake in the port, Prime reported yesterday after the market close, citing Chief Executive Officer Igor Sechin.
OAO Pharmstandard and OAO Mosenergo will be excluded from the Micex and RTS indexes from Dec. 17, according to a statement on the Moscow Exchange’s website. OAO Bank St. Petersburg and OAO KamAZ will be added in their place, it said. Pharmstandard fell 3.4 percent to 1,455.10 rubles. Mosenergo lost 1.5 percent to 79.32 kopeks.
The dollar-denominated RTS Index slid 1.9 percent to 1,372.44. 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 10.5 for the MSCI Emerging Markets Index.