Russian Energy Stocks Lead Micex to 8-Week Low as Brent Slides

Energy producers led declines in Russian shares as Brent crude slid to the lowest level in almost four years. OAO Severstal climbed to the highest level in two years after announcing special dividend payments.

The Micex Index lost 1.5 percent to 1,364.24 by the close in Moscow, the lowest level since Aug. 8. The drop extends this year’s decline to 9.3 percent. OAO Gazprom retreated 1.8 percent and OAO Lukoil dropped 2.8 percent. An attack by pro-Russian rebels on Donetsk airport in eastern Ukraine undermined a month-old truce.

Brent fell as much as 2.2 percent to $88.11 a barrel in London, the lowest level since December 2010, on speculation rising global supplies will be more than enough to meet slowing demand. The price slump is adding to pressure on Russian assets hurt by sanctions over the conflict in Ukraine. Russia derives about half its budget revenue from oil and natural-gas sales.

“The continued fall in oil prices is worrying investors,” Liza Ermolenko, an economist at London-based Capital Economics Ltd., said by e-mail. Oil below $90 a barrel “is very worrying, given that the Russian economy is already falling very sharply and given how dependent it is on oil,” she said.

Severstal,the steelmaker controlled by billionaire Alexey Mordashov, rose 4.6 percent to 400 rubles. The company said it is calling a shareholder meeting on Nov. 14 to vote on special dividends to distribute some of the $2.33 billion proceeds from the sale of Steel Dynamics Inc. and AK Steel Holding Corp. last month.

Weaker Ruble

The Donetsk airport attack was one of 35 rebel assaults with mortars and small arms on government positions in the past 24 hours, the military press center in Kiev said in a statement on Facebook.

The dollar-denominated RTS Index dropped 2.3 percent to 1,064.29, the lowest since March 14. Russia equity funds lost $68.9 million in the week ended Oct. 8, while Russia-dedicated equity funds had $92.5 million inflows in the same period, according to an e-mailed note by Sberbank CIB analysts, citing EPFR Global data.

X5 Retail Group NV advanced 3.6 percent in London to $17.34 after saying third-quarter net retail sales climbed 23 percent as it opened new stores. VTB Capital raised the stock to buy with a price estimate to $23.

“Efforts taken by management to improve store performance and accelerate top line growth are paying off,” Luis Saenz, head of equity sales and trading at BCS Financial Group in London, said in an e-mailed note.

AFK Sistema slumped 8.9 percent, extending its drop since its billionaire owner’s arrest last month to 64 percent. OAO Bashneft, Sistema’s oil business unit, fell 2.3 percent.

The prosecution may widen its demands against Sistema, Yuliya Malysheva, a spokeswoman for the Prosecutor General’s Office, said yesterday after a Moscow court began hearing its suit to return Sistema’s stake in oil producer Bashneft to the state.

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