The Micex Index fell for a second day, led by OAO Gazprom, as the threat of U.S. sanctions on Russian industries including energy and technology increased as violence marred a cease-fire in Ukraine.
The equity gauge lost 0.6 percent to 1,473.18 by the close in Moscow after falling 2.4 percent yesterday. Gazprom, Russia’s biggest gas exporter, retreated 1.2 percent, trimming this month’s increase to 4.1 percent. OAO Lukoil fell 0.4 percent as Russian energy shares lost 0.7 percent on average.
Ukraine Economy Minister Pavlo Sheremeta dimmed prospects for a truce with separatist rebels, saying today he isn’t “too optimistic” the two sides will reach a peace deal soon. The U.S. and European Union are raising pressure on Russia to ease violence that’s killed hundreds in Ukraine’s east. The U.S. is preparing sanctions aimed at specific economic areas, including energy and technology, three people briefed on the plans said.
“There is no good news, the market is waiting for sanctions,” Vadim Bit-Avragim, who helps oversee about $4.1 billion at Kapital Asset Management LLC in Moscow, said by e-mail. “The market was overheated and people are selling Gazprom now. Investors are taking profits.”
The Micex entered a bull market June 6 after rising more than 20 percent from a low on March 14, two days before citizens of Ukraine’s Crimea peninsula voted in favor of joining Russia. That spurred the worst standoff between Russia and the U.S. since the Cold War, and led the U.S. and European Union to impose sanctions on individuals and companies which exacerbated an economic slump.
German Chancellor Angela Merkel warned at an EU summit this week that more penalties could be “back on the agenda” if further progress isn’t made to end the Ukraine conflict. The dollar-denominated RTS Index declined 0.3 percent today.
“This trend started yesterday when investors heard speculation about new sanctions,” Sergey Vakhrameev, an analyst in Moscow at AnkorInvest LLC, said by phone.
The Micex trades at 5.4 times estimated earnings, the cheapest among 21 emerging markets tracked by Bloomberg. The 14-day relative strength index rose above 70 on June 24, a threshold that signals to some analysts a security is overbought. It was at 53.7 today.
OAO Mechel, the nation’s biggest coking coal producer, rose 0.4 percent. The government isn’t considering forcing Mechel to declare bankruptcy, Industry Minister Denis Manturov told reporters in Moscow today. The government and lenders have been in talks over how to enable Mechel, Russia’s second-most indebted company, to meet its debt obligations. The stock slumped 23 percent this year.
Clearstream Banking SA plans to start offering foreigners direct access to Russian stocks on July 1, spokesman Oliver Frischemeier said by e-mail yesterday. The move “could reduce spreads between local stocks and their depositary receipts via a more uniform distribution of traded volumes,” Deutsche Bank AG analysts led by Yaroslav Lissovolik said in an e-mailed note. The Russian regulator has allowed international depositories to open equities accounts from that date.
Euroclear Bank SA has delayed offering access to Russian stocks from July 1 because a bill that would have streamlined corporate actions in a format similar to those used by U.S. and European investors wasn’t introduced during the spring session of Russia’s lower house, according to Stephan Pouyat, global head of international markets at the world’s largest securities settlement system.
Euroclear is “trying” to start its services in July if lawmakers pass an amendment permitting shareholders to vote electronically on corporate actions during the spring session, he said.