Uralkali Falls to 11-Week Low as Funds Sell Before MSCI Removal

  • MSCI said on Friday it'll remove stock from Oct. 21 on buyback
  • Removal from MSCI could drive outflows of as much as $35m: VTB

Uralkali PJSC tumbled to an 11-week low as funds tracking MSCI Inc.’s indexes sold the stock with less than 48 hours to go before it is removed from the gauges.

MSCI, which provides benchmarks for global money managers overseeing $9.5 trillion, said Friday it’ll drop the world’s largest potash producer on Oct. 21 as the proportion of its outstanding shares available for purchase by international investors has fallen below the required threshold after a stock buyback. Uralkali declined 8.9 percent by the close of trading in Moscow, leading losses on the Micex index.

The exclusion could drive as much as $35 million of outflows by passively managed funds, VTB Capital said in an e-mailed note. Uralkali repurchased 22 percent of its shares including a stake held by Chengdong Investment Corp., a unit of China Investment Corp. The $2 billion buyback lowered the free float to 13.9 percent, the miner said on Friday. 

“Funds that track the MSCI indexes are forced to sell Uralkali shares,” Vadim Bit-Avragim, a money manager at Kapital Asset Management LLC in Moscow, said by phone. “The selloff is likely to continue tomorrow.”

The buyback may force Uralkali to delist its shares in London and Moscow if publicly available stock shrinks below thresholds, the company said in August. Expectations for a delisting pushed the company’s London-listed shares down 11 percent.

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