Russia’s benchmark equity gauge extended its worst start to the year since 2008 amid a rout in emerging-market shares. OAO Mobile TeleSystems advanced on plans to increase dividends.
The Micex Index dropped as much as 1.2 percent before paring its loss to 0.1 percent at 1,441.16 by the close in Moscow, the lowest since Dec. 5 and taking this year’s decline to 4.2 percent. OAO Alrosa slid 3.2 percent to 34.54 rubles following a Kommersant report OAO Rosneft seeks to cut the price of gas assets it agreed to buy from the nation’s biggest diamond producer for $1.4 billion. OAO Magnit, the nation’s biggest food retailer, declined 1.4 percent to 8,412.50 rubles.
Russia’s equity measure dropped this month as a report on Jan. 31 showed growth in 2013 was less than half the previous year’s pace, falling short of economist forecasts, and the Federal Reserve cut stimulus. January’s weaker-than-expected manufacturing growth released yesterday in the U.S. helped extend a selloff that’s erased about $2.9 trillion from global equities this year, according to data compiled by Bloomberg.
“Equities have long lost the appeal for investors,” said Stanislav Kopylov, who helps manage about $3 billion at UralSib Asset Management in Moscow, by phone. “The Fed’s decision to curb the stimulus program is the main reason behind the slump.”
The MSCI Emerging Markets Index has declined 8.4 percent this year, dropping 2 percent in the last two days.
Fed policy makers reduced the pace of bond buying for a second straight meeting on Jan. 29. The Micex Index advanced an average 77 percent during the Fed’s first two rounds of debt purchases, and fell 0.6 percent in periods of no stimulus, the biggest difference of 46 emerging and developed markets tracked by Bloomberg.
The Institute for Supply Management’s factory index decreased to 51.3 from 56.5 the prior month, the Tempe, Arizona-based group’s report showed. Readings greater than 50 indicate growth, and the median estimate was 56.
The Micex’s 14-day relative strength index dropped to 33, near a threshold of 30 that signals to some technical analysts a security is probably oversold and poised for a reversal.
The ruble has slumped 6.6 percent against the dollar this year, the second-worst performer among 24 emerging-market currencies tracked by Bloomberg. A weaker ruble encourages Russians to withdraw and convert local-currency deposits, while hurting retailers by making imports more expensive.
China’s non-manufacturing Purchasing Managers’ Index fell to 53.4 in January, the least since the gauge was created in March 2011, from 54.6 in December, data showed yesterday, adding to evidence that the world’s second-largest economy is slowing. A reading above 50 indicates expansion.
MTS, the nation’s biggest wireless operator, climbed as much as 4.7 percent, closing up 1.8 percent at 294.30 rubles. MTS will pay a total of 90 billion rubles ($2.6 billion) in dividends during 2014 and 2015, Chief Executive Officer Andrei Dubovskov told reporters in Moscow today.
Russia-dedicated stock funds posted $230 million of outflows in the week ended Jan. 29, the seventh consecutive week of redemptions, UralSib Capital LLC said on Jan. 31, citing EPFR Global data.
“Major outflows from emerging-market funds continue and Russia is no exception to this trend,” Kopylov said.
The dollar-denominated RTS Index dropped 0.1 percent to 1,291.82, the lowest since Aug. 30. Russian equities have the cheapest valuations among 21 developing-nation economies monitored by Bloomberg. Shares on the Micex trade at 3.1 times projected 12-month earnings, compared with a multiple of 9 for the MSCI Emerging Markets Index.