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Micex Caps Longest Losing Streak in 9 Months as Ruble Slumps

Russian shares had their longest losing streak since April as the ruble’s slide to a record low prompted investors to sell the cheapest emerging-market equities.

The Micex Index fell 0.5 percent to 1,462.99 by the close in Moscow, the lowest since Jan. 8. OAO Sberbank, the nation’s biggest lender with a 13 percent weighting in the index, slid 1.3 percent to 96.10 rubles, the lowest since Sept. 13. OAO Mobile TeleSystems, Russia’s largest wireless carrier, slumped 2.1 percent to 292.90 rubles.

The ruble depreciated 1.2 percent to 40.9632 versus the central bank’s dollar-euro basket by 6:01 p.m. in Moscow. A weaker ruble encourages Russians to withdraw and convert local-currency deposits, Sberbank’s main source of funding, while hurting retailers by making imports more expensive in ruble-denominated prices.

“Investors are scared of the ruble devaluation,” Sergey Vakhrameev, an analyst in Moscow at AnkorInvest LLC, which manages about $30 million in assets, said by phone. “During strong devaluations, stock markets fall, investors become scared of indexes in countries where the devaluation isn’t controlled.”

The central bank on Jan. 13 cut the so-called daily targeted interventions to zero from $60 million as part of its plan to make the currency free-floating by next year.

Cheapest Valuations

The Micex is down 2.7 percent this year on expectations the U.S. Federal Reserve, which started a two-day meeting yesterday, will cut its $75 billion monthly bond-buying program.

The Micex Index advanced an average 77 percent during the Fed’s first two rounds of bond buying, and fell 0.6 percent in periods of no stimulus, the biggest difference of 46 emerging and developed markets tracked by Bloomberg.

Crude oil, the nation’s chief export earner, fell 0.8 percent to $96.62 a barrel in New York. Russia receives about half of its budget revenue from oil and natural gas sales.

Standard & Poor’s GSCI Index retreated 0.3 percent to 621.97, extending its 1.6 percent slide this month. OAO Severstal closed down 3.9 percent at 286.50 rubles in Moscow and 6.2 percent to $8.11 in London.

“The factors that had led to the ruble’s slump are similar to those of other export-driven, commodity-dependent economies,” Dmitry Mikhailov, a money manager at Alfa Capital Partners Ltd. in Moscow, where he helps manage about $3 billion, said by phone. “The weakness will continue as commodity prices drop.”

The dollar-denominated RTS Index declined 1.8 percent to 1,308, the lowest since Sept. 4. Russian equities have the cheapest valuations among 21 developing-nation economies monitored by Bloomberg. Shares on the Micex trade at 3.3 times projected 12-month earnings, compared with a multiple of 9.1 for the MSCI Emerging Markets Index.

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