Most Russian shares fell as China’s industrial production missed estimates and the International Monetary Fund cut its forecast for economic growth in the world’s biggest energy exporter.
The benchmark Micex Index dropped 0.1 percent to 1,464.14 by the close in Moscow. Out of 50 shares, 20 rose and 30 dropped. OAO Gazprom, the nation’s biggest company, retreated 0.8 percent to 137.64 rubles. OAO Magnit, the country’s largest food retailer, rose 0.5 percent after saying retail sales increased last month.
Industrial shares dropped 0.5 percent on average as factory output in neighboring China expanded 10 percent from a year earlier in November, compared with the median estimate of 10.1 percent in a Bloomberg survey of economists. The IMF lowered Russia’s growth forecast for next year to 2 percent from 3 percent, the Washington-based fund said today.
“The market has frozen,” Mansur Mammadov, a money manager at Kazimir Partners in Moscow, which oversees $300 million, said by phone. “Relatively weak China data are important, but I’m expecting the market to rise in December and January. Russian equities are still cheap and undervalued, it’s a good entry point.”
Russia’s equities have the cheapest valuations among 21 emerging-market economies monitored by Bloomberg, with shares on the benchmark trading at 4.2 times projected 12-month earnings, compared with a multiple of 10.6 for the MSCI Emerging Markets Index.
The cost of Gazprom’s project to upgrade the domestic natural-gas pipeline network to feed its South Stream link to Europe has been revised to 738.5 billion rubles ($23 billion) from a previous estimate of 510 billion rubles, Interfax reported yesterday, citing Gazprom documents.
“We see the news as slightly negative, since it is the latest evidence of a steady increase in Gazprom’s investment program,” Alexander Kornilov, an analyst at OAO Alfa Bank in Moscow, said in an e-mailed note today.
Magnit, which has the fourth-biggest Micex weighting at 6.5 percent, advanced to 9,050 rubles as November retail sales rose 29 percent from a year earlier. The retailer’s global depositary receipts climbed 0.6 percent to $65.90 by 3:40 p.m. in London, while Gazprom’s receipts retreated 0.9 percent to $8.38. The dollar-denominated RTS Index in Moscow fell 0.2 percent to 1,409.85.
The Micex dropped 2 percent in November, the worst month since May, amid concern the nation’s economy is foundering. Russia cut its 2014 economic growth forecast to 2.5 percent from 3 percent, while raising this year’s inflation target to 6.2 percent, Interfax reported last week, citing Economy Minister Alexei Ulyukayev.
Russia-dedicated stock funds lost less than $90 million in the week to Dec. 4, UralSib Capital said in a note last week, citing EPFR Global data. Redemptions reached $3.52 billion in 2013 through Nov. 29, the most since the Boston-based research firm started tracking flows in 1996, EPFR Global said by e-mail Dec. 3.