Russia Stocks Drop Fifth Day as Gazprom Falls to Three-Year Low

Russian equities had the longest streak of declines since October as OAO Gazprom, the country’s biggest company, slid to a three-year low.

The Micex Index dropped 0.3 percent to 1,512.03 by the close in Moscow, the fifth day of declines. Of 50 stocks, 32 declined, 16 rose and 2 were unchanged. The dollar-denominated RTS Index added less than 0.1 percent to 1,582.35. Ten-day price swings slid to 5.911, the lowest since September 2005.

Gazprom, the world’s biggest natural-gas producer, retreated 1.5 percent to 133.26 rubles, the lowest level since April 2009. The company, which is holding an investor day in London today, said last week it sees its 2012 dividend falling as much as 22 percent after weaker natural-gas sales in all markets reduced earnings.

“There’s obvious pressure on the Gazprom shares, investors are fleeing the stock, adding pressure on the market,” Sergey Fundobny, head of research at Arbat Capital in Moscow, said by phone.

This is Gazprom’s seventh consecutive day of declines. Gazprom has the second-biggest weighting on the Micex at 13 percent.

OAO Novatek, Russia’s largest non-government natural gas producer, retreated 2.9 percent to 329.45 rubles, the most since Nov. 1 and the biggest decliner on the Micex. Tomorrow, President Vladimir Putin chairs a commission meeting on the energy sector, where gas and liquefied natural gas exports will be discussed. Novatek is seeking to weaken Gazprom’s monopoly by exempting liquefied natural gas, which is shipped by tanker rather than through Gazprom’s pipelines.

Novorossiysk Jumps

OAO Novorossiysk Commercial Sea Port surged 4.8 percent to 3.7459 rubles, the highest since April 2011 and the biggest gainer on the Micex. Novorossiysk rose on speculation the owners of Russia’s largest Black Sea harbor are boosting their stakes amid a reported boardroom conflict.

OAO Transneft, the state oil pipeline operator, has called on Novorossiysk’s board to elect a new chairman and chief executive officer, Kommersant reported yesterday, citing a letter from Transneft’s CEO Nikolay Tokarev to Ziyavudin Magomedov, Summa Group’s owner and the port’s current chairman.

The number of shares traded was 18 million, equivalent to about 7.5 times the three-month average.

Rates Meeting

Bank Rossii held the refinancing rate at 8.25 percent for a fifth month at today’s meeting in Moscow, matching all but one of the 22 forecasts in a survey of economists by Bloomberg.

Russia, the largest emerging-market nation to raise rates in 2012, is facing growing government pressure to ease monetary policy after economic growth last year slowed to 3.4 percent, the weakest since a 2009 recession.

“Inflation is still too much of a concern to cut rates,” Fundobny said.

European finance ministers from the 17-member euro area meet in Brussels today for the second day to discuss aid to Cyprus and Greece as a tightening election contest in Italy and a political scandal in Spain threaten to reignite the region’s debt crisis. The Group-of-20 finance chiefs and central bankers will gather in Moscow on Feb. 15.

Putin told a government meeting last month that borrowing costs “substantially” higher than inflation are concerning.

Trading Volumes

West Texas Intermediate oil climbed to $97.52, the highest level in more than a week, as OPEC boosted a demand forecast for its crude this year and the Group of Seven pledged to avoid devaluing exchange rates. The Standard & Poor’s GSCI Index of commodities was up 0.2 percent at 678.65.

The Market Vectors Russia ETF, the largest dedicated Russian exchange-traded fund, declined 0.3 percent to $30.30 on yesterday. The RTS Volatility Index, which measures expected swings in futures, increased 0.8 percent to 22.45 points. The Bloomberg Russia-US Equity Index of the most-traded Russian stocks in the U.S. fell 0.2 percent yesterday.

The number of shares traded on the Micex was 36 percent below the gauge’s 10-day average, data compiled by Bloomberg show. The Russian Depositary Index added 0.4 percent, led by OAO Sberbank’s depositary receipts rising 2.7 percent. Sberbank climbed 1.4 percent to 108.49 rubles in Moscow.

The Micex trades at about 5.6 times estimated earnings and has added 2.5 percent this year. That compares with a multiple of 10 times for the MSCI Emerging Markets Index, which has gained 0.3 percent over the same period.

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