Russian stocks dropped the most in six weeks as OAO Gazprom declined on concern Ukraine’s deadly clashes will disrupt gas supplies to Europe and the ruble weakened to a record.
The Micex Index lost 1.2 percent to 1,485.60 by the close in Moscow, the steepest retreat since Jan. 6. Gazprom retreated 3.6 percent to 147.46 rubles, its biggest loss since June 11. OAO TMK, the world’s largest maker of pipes for the oil and gas industry by volume, slumped 11 percent, the most since September 2011, after the U.S. Commerce Department preliminarily set tariffs on imports of steel tubing from eight countries.
In the bloodiest episode of Ukraine’s three-month crisis, at least 25 people have been killed since yesterday as security forces moved to clear the makeshift protest camp in central Kiev. The ruble lost 1 percent versus Bank Rossii’s target basket of dollars and euros to 41.8345 by 6 p.m. in Moscow on bets a plan to replenish one of the nation’s wealth funds will blunt central bank steps to support the local currency.
“The political instability in Ukraine is negative for Gazprom because it triggers questions about its ability to repay gas debts and concerns that the company’s transit to Europe may be disrupted,” Anvar Gilyazitdinov, who manages about $10 million at Rye, Man & Gor Securities in Moscow, said by phone.
Russia’s finance ministry will buy foreign currency equivalent to 3.5 billion rubles ($98 million) daily from Feb. 20 through May from the central bank, which will decrease its interventions by the same amount, the ministry said in an e-mailed statement yesterday.
Russian gas supplies to Europe, comprising about a quarter of the region’s demand, have been halted in the past decade amid disputes over price and transit arrangements with Ukraine.
Ukraine, a key route for Russia’s energy exports to Europe, owes Gazprom $2.63 billion for 2013 gas supplies and $658 million for last month’s shipments, Gazprom said on Feb. 3. NAK Naftogaz Ukrainy, Ukraine’s state energy company, made a $1.28 billion payment to Gazprom on Feb. 14 and also paid down $191 million of debt to Gazprom accrued since the beginning of 2014, according to a Ukrainian bond prospectus on the Irish stock exchange website.
President Viktor Yanukovych has been rattled by anti-government protests, which turned violent last month, after he snubbed a European Union cooperation agreement in November in favor of improving relations with Russia.
Gazprom’s ADRs tumbled 3.7 percent to $8.33 in London, set for the biggest decline since June 20.
OAO Rostelecom fell 2.8 percent to 108.90 rubles, the most since Nov. 26. Rostelecom set a buyout ratio for minorities who didn’t support spinning off the company’s mobile assets into a joint venture at 27.8 percent of the tendered amount, it said in a statement today. That’s below the 39 percent rate reported by Vedomosti on Feb. 17.
OAO Sberbank, the nation’s biggest lender, fell 2 percent to 94.80 rubles, the steepest loss since Jan. 6. The ruble’s 8 percent slump versus the dollar this year encourages Russians to withdraw and convert local-currency deposits, while hurting retailers by making imports more expensive.
Russia’s second-biggest oil producer OAO Lukoil slipped 0.7 percent to 2,027.30 rubles after last year’s profit plunged 29 percent to $7.8 billion as impairments reached $2.1 billion. Its global depositary receipts lost 1.4 percent to $56.73 in London.
Lukoil, the nation’s biggest oil company after OAO Rosneft, turned to acquisitions last year after output at its Yuzhnoye Khylchuyu field in the Arctic failed to meet expectations and African exploratory wells didn’t find commercial resources. It recognized refining losses as the market in Europe soured and a goodwill expense was incurred from its purchase of Italy’s ISAB refinery.
“Lukoil showed weak earnings on the impairment losses,” Gilyazitdinov said. “They don’t seem to be finding oil in Africa.”
Russia’s state-run electricity exporter OAO Inter RAO UES dropped 2.5 percent to 1.07 kopeks, the second day of declines. The company will probably not pay a dividend for last year after incurring a loss under Russian accounting standards, Interfax reported Feb. 17, citing Chief Executive Officer Boris Kovalchuk.
The dollar-denominated RTS Index fell 2.8 percent to 1,306, the most since Jan. 6. The ruble’s performance against the dollar this year is the worst after Argentina’s peso among 24 developing countries tracked by Bloomberg.
The nation’s equities have the cheapest valuations among 21 developing countries monitored by Bloomberg, with shares on the Micex trading at 3.1 times projected 12-month earnings, compared with a multiple of 9.3 for the MSCI Emerging Markets Index.