Russia Stocks Retreat Third Day on Ukraine Clashes, Chinese Data
Russian stocks slid for a third day as violence worsened in neighboring Ukraine and economic data from China that missed economists’ forecasts curbed appetite for metal producers.
The Micex Index (INDEXCF) lost 0.3 percent to 1,480.99 by the close in Moscow, the lowest in a week. Billionaire Vladimir Evtushenkov’s holding company AFK Sistema sank 3.9 percent to 39.131 rubles. Polymetal International Plc (POLY) dropped 3.4 percent to 378.96 rubles. OAO Novolipetsk Steel sank 1.1 percent to 51.54 rubles.
At least seven people were killed in the Ukrainian capital in clashes that shattered a truce declared last night by President Viktor Yanukovych and opposition leaders amid a three-month standoff sparked by the 63-year-old leader’s spurning of a trade deal with Europe in favor of $15 billion in Russian aid. A gauge of Chinese manufacturing released by HSBC Holdings Plc and Markit Economics signaled a second month of contraction in February.
“The continued escalation of violence in Ukraine is increasing concerns that the country won’t be able to repay its debt to Russia,” Yuri Selyandin, a money manager who helps oversee about $2 billion at GHP Group in Moscow, said by phone. “China is an essential partner for Russia, so a slowdown in the country’s economic activity sends a bad signal, especially for commodity exporters.”
A total of 64 people have been killed and 551 sought medical attention in a worsening of violence in Kiev since Feb. 18, the Ukrainian Health Ministry said today. A nationwide anti-terrorism operation to restore order and protect borders gives the military the right to search, detain and fire on civilians, the Defense Ministry said.
OAO Mobile TeleSystems, Russia’s biggest wireless operator, fell 2 percent to 282.2 rubles. The Moscow-based company generated 15 percent of third-quarter net income in Ukraine.
In addition to MTS, OAO Gazprom, VimpelCom Ltd. and VTB Group have direct exposure to Ukraine, Sberbank Investment Research analysts said in an e-mailed note today. After its biggest loss since June yesterday, Gazprom rose 0.5 percent today to 148.17 rubles, erasing declines earlier in the day.
“If the situation in Ukraine develops such that investors start to worry about the division of Europe and a setback to reform in Russia, then they are likely to reduce their holdings of Russian assets,” Sberbank Investment Research analysts led by Kingsmill Bond said in the note.
The dollar-denominated RTS Index (RTSI$) fell 0.2 percent to 1,303.15, the lowest since Feb. 4. The ruble has retreated 7.9 percent this year against the dollar, the worst performance after Argentina’s peso among 24 developing countries tracked by Bloomberg.
The nation’s equities have the cheapest valuations among 21 developing countries monitored by Bloomberg, with shares on the Micex trading at 3.1 times projected 12-month earnings, compared with a multiple of 10.1 for the MSCI Emerging Markets Index.
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