RTS Index Futures Fall Most in a Week on Protests in Egypt
Russian RTS stock-index futures fell the most in a week, signaling Russian stocks may extend their decline after political unrest in Egypt intensified.
Futures on the RTS Index expiring in March fell 1.7 percent to close at 187,165 on Jan. 28, the biggest drop since Jan. 20. The Market Vectors Russia ETF, a U.S.-traded fund that holds Russian shares, declined 3.4 percent, the most since Aug. 11.
Stocks worldwide plunged, crude oil jumped and the dollar gained against the euro after protesters seeking the ouster of Egypt’s President Hosni Mubarak clashed with police, defying a curfew and setting fire to some buildings. The Micex Index of 30 stocks decreased 0.9 percent to 1,735.01 on Jan. 28, giving it a loss of 0.7 percent in a week that started with a bomb attack at Moscow’s biggest airport.
“We are still in an environment of a reduced level of conviction,” said Ian McCall , who helps oversee about $500 million of emerging-market debt as a director at Argo Capital Management Ltd. in London. “People look at Egypt, Tunisia and ask questions.”
Futures on OAO Lukoil, Russia’s second-biggest oil producer, fell 1.6 percent, while futures on OAO Gazprom, Russia’s gas-export monopoly, slid 0.8 percent.
Russian stocks had their first weekly loss since September. Through Jan. 21, the Micex gained for 17 consecutive weeks, the longest stretch since at least 1997. The ruble weakened 0.5 percent Jan. 28 to 29.7026 per dollar.
Oil, Russia’s main export revenue earner, surged the most since September 2009, rising 4.3 percent to $89.34 on the New York Mercantile Exchange.
Federal Grid Co., Russia’s power-distribution monopoly, slid 5.3 percent. OAO Severstal, the country’s biggest steelmaker, dropped 4 percent. Lukoil decreased 1.6 percent. OAO Polyus Gold, the nation’s largest gold producer, added 1.6 percent as investors sought a safe haven.
“There are two dynamics at work right now: one is the overall risk aversion and the other is an assessment of fundamentals,” said McCall in a telephone interview from London. “Egypt is a pretty big producer of oil and if oil goes up, that is good for Russia.”
McCall predicts Russian stocks may rise as much as 25 percent this year from 2010.
Russian-focused equity funds saw inflows for the ninth straight week, taking in $169 million, Alfa Bank said, citing research company EPFR.
The nation’s benchmark Micex has climbed 2.8 percent this year, outperforming the MSCI Emerging Markets Index, which is down 2.2 percent. The Micex lost 1.8 in the first two days of last week after a bomb attack killed 35 people at Domodedovo airport Jan. 24.
A possible 10 percent correction has made Michael Kart, a managing director at Moscow-based investment firm Marshall Spectrum Ltd, increase cash exposure in his portfolio by 30 percent.
“If we see a correction, it will be limited in scope,” Kart said by phone. “The fundamentals are still good. Western investors have been very encouraged by BP’s share swap with Rosneft.”
Investors channeled a record $724 million of funds into Russia in the week to Jan. 19, after BP Plc, Europe’s second- largest oil company, agreed to swap 5 percent of its shares for a 9.5 percent stake in state-run OAO Rosneft on Jan. 14.
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