Russia Stocks Drop Most in Week as Lukoil Retreats With Crude

Russian equities fell the most in a week as oil, the nation’s main export, retreated before European finance ministers meet to discuss the region’s debt crisis.

The Micex Index dropped 0.2 percent to 1,537.66 by the close in Moscow, snapping two days of gains. Of the 50 stocks in the gauge, 16 advanced and 34 retreated. Utilities, industrials and oil and gas shares lost at least 0.4 percent. OAO Lukoil, Russia’s second-biggest crude producer with the third-largest weight in the Micex, slid 0.9 percent.

Finance ministers in Brussels will assess Spain, Greece and Cyprus and debate how to enact policies they promised to subdue the region’s crisis. U.S. lawmakers vote this week on budget measures. Crude oil fell from the highest price in four months, declining 0.4 percent to $95.15 in New York.

“The majority of investors are turned off by Russia at the moment,” Alexei Yazikov, head of research at Aton Capital, said by phone from Moscow. “They see Russia as a derivative of the oil price and don’t want to invest right now.”

OAO Gazprom, Russia’s largest company and its natural-gas export monopoly, sank 0.6 percent to 147.64 rubles. OAO Sollers, a Russian automaker that works with Ford Motor Co., increased 1.4 percent.

The amount of shares traded on the Micex was 51 percent below the 10-day average, data compiled by Bloomberg show. The RTS Index, Russia’s dollar-denominated equity gauge, declined 0.2 percent to 1,600.13. The Bloomberg Russia-US stocks measure added 0.2 percent to 103.11 on Jan. 18.

Exchange IPO

The Moscow Exchange, which runs the Micex and RTS indexes, expects its initial public offering to raise more than $500 million, according to a person familiar with the bourse’s plans.

The bourse will sell stock through its own platform in the Russian capital and abroad, although not on the London Stock Exchange, said the person, who asked not to be identified, citing a quiet period before the IPO.

Credit Suisse Group AG, JPMorgan Chase & Co., Sberbank CIB and VTB Capital are organizing the IPO, the exchange said today in an e-mailed statement.

The Market Vectors Russia ETF, the largest dedicated Russian exchange-traded fund, rose 0.9 percent to $30.38 on Jan. 18. The RTS Volatility Index, which measures expected swings in the stock futures, declined 6.1 percent to 20.20.

Russia receives about half of its budget revenue from oil and natural gas. The Micex’s 10-day volatility declined to 11.18, the lowest level since Dec. 28, according to data compiled by Bloomberg.

Lowest Valuations

The U.S. markets are closed today for a public holiday. Nickel, tin and lead fell on the London Metal Exchange. The Russian Depositary Index added 0.2 percent to 1,803.90.

OAO Phosagro, the world’s largest phosphate fertilizer maker, surged as much as 1.8 percent before closing up 0.9 percent at 1,219.30 rubles. The company’s fertilizer production rose 8.6 percent from a year earlier. The amount of shares traded was 6,590, equivalent to more than twice the amount of the three-month average.

The Micex trades at about 5.7 times estimated earnings and has added 4.3 percent this year. That compares with a multiple of 10.8 times for the MSCI Emerging Markets Index, which has gained 2.1 percent this year.

Russian equities have the lowest valuations based on estimated earnings among 21 emerging markets tracked by Bloomberg.

Before it's here, it's on the Bloomberg Terminal.