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Russia’s Micex Index Drops to Three-Month Low as Gazprom Slides

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Dec. 4 (Bloomberg) -- Russia’s benchmark gauge fell to the lowest in three months as OAO Gazprom retreated after a report the nation’s biggest company may issue new shares to claim assets in the Sochi Olympic complex.

The Micex Index dropped 0.7 percent to 1,439.26 by the close in Moscow, the lowest since Sept. 6. OAO Pharmstandard slid 2.6 percent to 1,416.90 rubles. Gazprom declined 1.4 percent to 136.60 rubles, the lowest since Sept. 4.

Gazprom, which has the biggest weighting on the index at 15 percent, decreased on the report by the Interfax news service. No government order has been issued on the new share issuance, spokesman Sergei Kupriyanov said. Pharmstandard fell for a second day after the Moscow Exchange said Dec. 3 that it and OAO Mosenergo will be excluded from the Micex and RTS indexes from Dec. 17.

“Gazprom fell on the rumors that it might issue new shares,” Vadim Bit-Avragim, who helps oversee about 160 billion rubles ($4.8 billion) at Kapital Asset Management LLC in Moscow, said by phone. “And although they denied the report, the main thing is the negative newsflow.”

Consumer services shares led the drop among nine industry groups on the Micex, losing 3.1 percent on average. OAO Magnit, the nation’s biggest retailer, fell 3.7 percent to 8,645 rubles. Magnit slid 2.4 percent to $62.70 in London.

Mechel Waiver

OAO Mechel, Russia’s biggest coking-coal producer, added 3.4 percent to 61 rubles. A group of lenders, including ING Bank NV, Societe Generale SA and UniCredit SpA, agreed to delay payments on Mechel’s $1 billion loan until 2015 and 2016, according to a company statement released yesterday.

“For Mechel, of course, this is a good sign,” Bit-Avragim said. “A temporary delay gives them time to cut their debts and optimize their business.”

VTB Group, OAO Sberbank and OAO Gazprombank account for about 58 percent of Mechel’s debt, according to the company’s annual report. Prices for coking-coal, which is used in the $1.3 trillion market for steel, have dropped 15 percent this year.

Crude oil jumped 0.7 percent to $96.73 in New York, its fourth day of gains. Russia receives about half of its budget revenue from oil and natural gas sales.

Russian stocks slumped 2 percent last month, the worst drop since May, amid concern an economic recovery in the world’s biggest energy exporter is foundering. The Micex has lost 2.4 percent this year.

Aeroflot Gains

OAO Aeroflot, Russia’s biggest air carrier, surged 7.7 percent to 67.48 rubles, the most since August 2011. Otkritie Capital raised the stock to hold from sell today, citing third-quarter earnings, which raise dividend expectations, according to an e-mailed note.

The company aims to sell as much as 10 percent of its stock next year in a push to boost the volume traded on the Moscow exchange and establish a value for Russia’s largest airline ahead of a planned privatization, Chief Executive Officer Vitaly Savelyev said in an interview.

The dollar-denominated RTS Index fell 0.6 percent to 1,364.44. Russia’s equities have the cheapest valuations among 21 emerging-market economies monitored by Bloomberg, with shares on the benchmark trading at 4.1 times projected 12-month earnings, compared with a multiple of 10.5 for the MSCI Emerging Markets Index.

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

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