Bloomberg News

Russian Stocks Fall Most in Two Weeks, Led by Lukoil, Sberbank

June 17, 2009

Russian stocks fell the most in two weeks as oil retreated for a fourth day and concerns deepened that gains in the world’s second-best performing equity market may have come too far given prospects for economic recovery.

OAO Rosneft and OAO Lukoil, the country’s largest oil companies, lost more than 4 percent. OAO Sberbank, the biggest lender, sank 6.2 percent as the ruble fell and Standard & Poor’s said the nation’s banks face a surge in “troubled assets” that may total $213 billion. The 30-stock Micex Index (INDEXCF) slid 5.5 percent to 1,039.43, trimming this year’s gain to 68 percent.

Russian equities, posting the world’s second-biggest gain after Peru in 2009, have climbed as oil and metals prices rallied on signs the worst of the global slowdown is over. Crude dropped below $70 a barrel today amid speculation that the economic recovery has yet to take hold.

“Oil prices, the single most important driver of equities and the ruble, has come off today, as investors are nervous that recovery is going to be slow,” Chris Weafer, chief strategist for Moscow-based UralSib Financial Corp., said by e-mail today. “Investors everywhere are concerned the market’s rally has run too far ahead of economic reality.”

Russia’s economy faces a contraction of at least 6 percent this year, its first recession in a decade, President Dmitry Medvedev said earlier this month.

Rosneft, the nation’s largest oil company, lost 5.5 percent to 181.21 rubles. Lukoil dropped 4.5 percent to 1,514.74 rubles.

Crude fell 74 cents to $69.73 a barrel in New York after a U.S. government report showed a bigger-than-expected gain in supplies of gasoline.

Sberbank, Norilsk

Sberbank, the country’s biggest savings bank, slid 6.2 percent to 43.20 rubles. VTB Group, the second-largest, lost 5.6 percent to 3.84 kopeks.

The ruble declined 0.3 percent to 31.3003 per dollar. As the currency weakens, Russians are more likely to withdraw or convert ruble deposits, Sberbank’s primary means of funding.

S&P said as much as 38 percent of all assets held by Russian banks, including restructured loans, may become problematic by the end of 2011, according to a report today.

OAO GMK Norilsk Nickel, the country’s largest mining company, shed 7.4 percent to 3,033.37 rubles. Copper fell for a fourth day in London, the longest losing streak since December.

To contact the reporter on this story: Torrey Clark in Moscow at tclark8@bloomberg.net.

To contact the editor responsible for this story: David Merritt at dmerritt1@bloomberg.net


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