The biggest exchange-traded fund tracking Russian stocks ended a four-day gain as data showed industrial production fell more than forecast and oil slumped, dimming the economic outlook for the world’s biggest energy exporter.
The Market Vectors Russia ETF slid 1.6 percent to $17.82 in New York. Energy companies, which account for 43 percent of the fund’s weighting, tumbled as Brent crude slid to a one-week low. A Bloomberg gauge of U.S.-traded Russian stocks fell for a second day.
Russian equity assets tumbled after government data on Wednesday showed output at factories, utilities and mines dropped 4.8 percent in June from a year earlier, exceeding the median forecast for a 4 percent decline among 18 economists surveyed by Bloomberg. It was the fifth consecutive month that industrial production fell, the longest slump since 2009. The report further damped speculation that a recession forecast for this year may be milder than projected.
“The economic data doesn’t give much reason for optimism,” Sergei Pigarev, an analyst at Rye, Man & Gor in Moscow, said by phone Wednesday. “Between a slump in industrial production, a decline in Brent prices and a contraction in the economy, I don’t see too many drivers of economic growth.”
In addition to oil selling for about three-fifths of its five-year average price, Russia’s growth has been curbed by international sanctions linked to the Ukraine conflict. Gross domestic product contracted 1.9 percent in the first quarter, data showed in May. Bloomberg surveys show economists project quarterly contractions through the first three months of next year. The country’s last recession was in 2009.
Brent crude, the oil grade traders use to price the country’s main export blend, fell 2.5 percent to $57.05 a barrel, extending its drop from this year’s high in May to 16 percent. The contract rose 0.8 percent to $57.49 at 10:45 a.m. Hong Kong time. Russia depends on oil and natural gas for about half its budget revenue.
The Bloomberg Russia-US Equity Index declined 0.5 percent to 54.22. Futures on the dollar-denominated RTS Index expiring in September dropped 0.7 percent to 89,870 in U.S. hours.
United Co. Rusal declined 3.2 percent to HK$3.90 in Hong Kong, poised to snap a five-day, 30 percent surge.