Russia’s Micex Poised for Worst Month Since May as Mechel Slumps
Russian stocks were set for the worst monthly decline in six as the nation’s biggest coking-coal producer OAO Mechel (MTLR) extended its steepest decline on record for the period.
The Micex Index (INDEXCF) fell 0.2 percent to 1,476.70 by 3:09 p.m. in Moscow. OAO Novorossiysk Commercial Sea Port slumped 3.2 percent to 3.06 rubles. Mechel decreased as much as 4.5 percent. State-run power company OAO Inter RAO UES surged 4.3 percent to 0.76 kopeks after JPMorgan Chase & Co. raised it to the equivalent of buy, citing lower valuations.
Russian stocks have lost 2.2 percent this month after adding 10 percent in September and October amid concern the economic recovery is foundering. Growth will likely miss the government’s 1.8 percent goal in 2013, a pace that would mark the weakest expansion since the recession in 2009, Economy Minister Alexei Ulyukayev said Nov. 13. Russia-dedicated equity fund outflows are set for the worst year on record, with redemptions reaching more than $130 million in the week ended Nov. 27, according to UralSib Capital’s note.
“There’s been a correction in the stock market this month after good growth in September, October,” Mark Rubinstein, head of research at IFC Metropol, said by phone from Moscow. “The market will renew its growth in December, I’m expecting a rally.”
Mechel and power stocks, including Inter RAO, OAO Russian Grids and Federal Grid Co., are this month’s worst performers on the nation’s benchmark index.
MSCI Inc.’s Russia Utility index has slumped 52 percent this year on concern earnings will suffer from a tariff freeze next year. Mechel’s shares fell 41 percent on Nov. 13 in Moscow, their biggest decline since at least 2008, triggered by concern the company won’t be able to refinance debt as it sought to obtain a waiver on its covenants. Mechel retreated 1.5 percent to 59.40 rubles today for a 43 percent decline in the month.
“Utilities stocks will continue falling for another two-three months because of the tariff freeze and uncertainty in the government regulation of the sector,” Rubinstein said. “Power stocks aren’t favored by investors.”
OAO Alrosa added 2 percent to 34.94 rubles. The world’s largest diamond producer said today it’ll pay more than 35 percent of consolidated net income as dividends.
The RTS Index (RTSI$) dropped 0.3 percent to 1,402.87. Russia’s equities have the cheapest valuations among 21 emerging economies monitored by Bloomberg, with shares on the benchmark trading at 4.2 times projected 12-month earnings, compared with a multiple of 10.7 for the MSCI Emerging Markets Index.
To contact the reporter on this story: Ksenia Galouchko in Moscow at firstname.lastname@example.org
To contact the editor responsible for this story: Wojciech Moskwa at email@example.com