Russia Stocks Curb Best Quarter Since 2010 as Crude Oil Retreats

Russian stocks trimmed their strongest quarter in almost three years as crude oil, the nation’s chief export earner, declined amid concern U.S. budget wrangling will lead to a government shutdown.

The Micex fell 0.6 percent to 1,462.82 by the close in Moscow, paring its advance this month to 7.2 percent. The gauge is up 10 percent this quarter, the best gain for the period since the three months ended in December 2010. OAO Lukoil, Russia’s biggest oil producer, declined 1.4 percent to 2,050.20 rubles, the most since Aug. 15. OAO Sberbank, the nation’s largest lender, retreated 1 percent to 97.70 rubles.

Russian stocks rallied this month after the Federal Reserve unexpectedly refrained from reducing monetary stimulus, stoking appetite for riskier assets. The U.S. government stands poised for its first partial shutdown in 17 years at midnight tonight, after a weekend with no signs of negotiations or compromise from either the House or Senate to avert it. Crude retreated 1 percent to $101.86 in New York.

“The Russian market is sensitive to the conflict inside the U.S.,” Aleksei Belkin, who helps manage about $4.4 billion in assets as chief investment officer at Kapital Asset Management LLC in Moscow, said by phone. “Although we’re seeing a small drop after a rally, Russian stocks have potential to rise next quarter.”

Even after this month’s gains, Russian equities have the cheapest valuations among 21 emerging economies tracked by Bloomberg. The Micex Index’s 12-month estimated price-to-earnings ratio was at 4.3 today, compared with a multiple of 10.4 for the MSCI Emerging Markets Index.

Minorities Buyout

OAO Mechel, Russia’s largest coking coal producer, dropped 2.1 percent to 102.90 rubles, the lowest since Sept. 6. OAO Severstal, Russia’s second-largest steelmaker, tumbled 1.3 percent to 282.30 rubles.

OAO RN Holding, formerly TNK-BP Holding, jumped 5.4 percent to 63.44 rubles, extending a 12 percent gain on Sept. 27. The board of directors of owner OAO Rosneft approved the buyout of minority shareholders at 67 rubles an ordinary share and 55 rubles a preferred share.

Rosneft took over TNK-BP, which was renamed RN Holding this year, after a decade-long partnership between BP Plc and a group of billionaires soured, becoming the world’s biggest publicly traded oil producer by volume.

Half Price

“Minority shareholders who accept the offer will receive just half of the price for their shares that the oligarchs and the big foreign major got for theirs,” Sberbank CIB analysts said in an e-mailed note today.

OAO Alrosa, the world’s largest diamond producer by output, tumbled 2.2 percent to 36.003 rubles, the most since Aug. 2. Alrosa is set to sell a 14 percent stake in Moscow next month, two people with direct knowledge of the matter people said earlier this month, asking not to be identified because the information isn’t public.

Trading volumes on the Micex were 5.9 percent above the 30-day average today, data compiled by Bloomberg show. Ten-day price swings rose to 13.711. The dollar-denominated RTS Index retreated 0.7 percent to 1,422.49.

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