Russian stocks tumbled as the ruble fell while oil and gas shares dropped with crude amid concern that Ukraine will be unable to pay for energy imports.
The Micex Index fell 0.7 percent to 1,478.64 by the close in Moscow, the lowest level since Feb. 13. OAO Gazprom, which sends more than half of its European gas exports via Ukraine, dropped 2 percent to 146.20 rubles. OAO Bashneft, a regional oil producer, retreated 3.5 percent to 2,078 rubles.
Ukraine can’t pay about $1.6 billion it owes Russia for natural gas because local utilities haven’t paid for supplies in more than a year, Kommersant newspaper said today, citing Ukrainian Energy Minister Eduard Stavytskyi. The one-third discount it receives on Russian gas will probably be extended to the second quarter, he was reported to have said. Brent crude slid 0.5 percent to $110.06 in London.
“The issue for Gazprom is that it’s unclear how Ukraine is going to be paying the bills,” Alexei Kokin, an analyst at UralSib Capital in Moscow, said by phone. “If they keep the discounted prices, it’s the worst scenario for Gazprom: a combination of low prices and lack of clarity about the repayment of debts.”
The temporary government in Kiev said it needs $35 billion in financial assistance as the U.S. and the European Union pledged aid for a new administration. Russia’s Foreign Ministry said opponents of deposed President Viktor Yanukovych broke a Feb. 21 peace agreement and threatened the stability of the nation.
The ruble weakened 0.3 percent to 41.6004 against the central bank’s target basket of dollars and euros by 6 p.m. today, when Bank Rossii stops its open-market operations. The ruble has retreated 7.8 percent this year against the dollar, the worst performance after Argentina’s peso among 24 developing countries tracked by Bloomberg. The Micex advanced as much as 0.4 percent earlier today.
“The market erased gains as the ruble started weakening,” Yuri Selyandin, a money manager who helps oversee about $2 billion at GHP Group in Moscow, said by phone today.
PIK Group, a residential real-estate developer, gained 1 percent to 82.11 rubles. PIK advanced on speculation it’ll pay a debut dividend for last year, according to an e-mailed research note from VTB Capital. Preferred shares of OAO Surgutneftegas jumped 2.6 percent to 26.22 rubles.
The dollar-denominated RTS Index retreated 1 percent to 1,306.37. The nation’s equities have the cheapest valuations among 21 developing countries monitored by Bloomberg, with shares on the Micex trading at 5.3 times projected 12-month earnings, compared with a multiple of 10.2 for the MSCI Emerging Markets Index.