Russian Stocks Slump as China Woes Pull Down Mechel, Norilsk
The Micex Index retreated 0.4 percent to 1,496.37 by the close in Moscow. Of 50 stocks, 23 rose and 27 decreased. Moscow United Electric Grid Co. gained 4.7 percent. The dollar- denominated RTS Index (RTSI$) declined 0.7 percent to 1,531.14. Mechel dropped 3.2 percent, while Norilsk lost 2.1 percent. Both companies export metals to China.
Emerging-market stocks dropped to a one-week low after Chinese real estate and construction companies retreated. The Micex trades at about 5.5 times estimated earnings and has added 1.5 percent this year. That compares with a multiple of 11 times for the MSCI Emerging Markets Index, which dropped 0.4 percent over the same period.
“The Russian market is stuck in a rut and bogged down by weak Chinese growth and subdued commodity prices,” Julian Rimmer, who trades Russian and Turkish stocks at CF Global Trading UK Ltd., said by e-mail. “There are no inflows or outflows and retail sentiment is abject so Russia isn’t really a suitable vehicle for expressing any market view at present.”
OAO Gazprom, Russia’s natural gas export monopoly, jumped as much as 3.4 percent before closing up 2.5 percent at 140.58 rubles, the highest level since Feb. 5. The stock has the second-biggest weighting on the Micex at 14 percent.
OAO Rosneftegaz, a state-owned energy holding, plans to spend more than 8.2 billion rubles ($267 million) buying at least 0.23 percent of Gazprom stock, Izvestia reported, citing a letter by Rosneftegaz Chairman Igor Sechin to President Vladimir Putin. Gazprom’s Chief Executive Officer Alexei Miller met today with the management of China National Petroleum Corp. to discuss supplies from Russia’s eastern gas fields to China, according to a press release.
“Investors get excited over any news about the China deal,” Alexei Kokin, an analyst at UralSib Capital in Moscow, said by phone. “This is a new market for Gazprom. Exchange- traded funds were probably buying the stock today.”
Gazprom has been negotiating a deal to transport as much as 68 billion cubic meters of gas a year to China, the world’s fastest growing major economy, since the two companies signed a cooperation deal in 2004. The talks have stalled repeatedly because of price disagreements.
OAO MegaFon (MFON), Russia’s second-largest mobile-phone operator, tumbled as much as 4.8 percent in London, the most since its initial public offering in November. Credit Suisse Group AG (CS) placed 1.6 million depositary receipts, selling a stake worth about $48 million, according to terms obtained by Bloomberg News.
The amount of shares traded was about 2.6 million, equivalent to about 3 times the three-month average. The Russian Depositary Index (RDXUSD) retreated 0.6 percent, led by depositary receipts of OAO Novolipetsk Steel.
The Market Vectors Russia ETF (RSX), the largest dedicated Russian exchange-traded fund, declined 1.2 percent to $28.92 yesterday. The RTS Volatility Index, which measures expected swings in the index futures, was steady at 20.90.
Oil in New York added 0.6 percent to $93.13 a barrel, the fifth day of increases. Crude and natural gas account for about 50 percent of Russia’s budget revenue. Standard & Poor’s GSCI Index of raw materials was steady at 649.67. The Bloomberg Russia-US Equity Index (RUS14BN) of the 14 most-traded Russian stocks in the U.S. lost 1.3 percent yesterday.
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