Russian stocks slid to their lowest in 12 days and the ruble weakened against the dollar after German restrictions on speculative trading triggered a slump in emerging-market assets and oil.
Steelmaker OAO Novolipetsk Steel retreated 5.2 percent. OAO Rosneft, the country’s largest oil producer, slumped 4.7 percent. OAO Sberbank, its biggest lender, dropped 4.2 percent. The Micex Index (INDEXCF) of 30 stocks fell 3 percent to 1,320.90 at the close in Moscow, its lowest since May 7. The ruble weakened 1.7 percent versus the dollar to 30.7675, according to the last transaction price posted on the Micex website.
The euro slid to its lowest since April 2006 against the dollar after Germany prohibited naked short-selling and speculating on European government bonds with credit-default swaps. A stronger dollar curbs the appeal of commodities as an alternative investment. The MSCI Emerging Markets Index dropped 3.3 percent to 908.6, heading for the lowest close since Feb. 8.
“Investors are using the German ban on short trading as an excuse to sell,” Elena Suslova, portfolio manager at Wermuth Asset Management, which manages about $400 million in Russia and eastern Europe, said by phone. “It’s nothing to with Germany’s populist measure but more to do with a persistent fear about Europe’s debt crisis.”
Crude oil, Russia’s biggest export earner, sank as much as 2.2 percent in New York, the lowest intraday level since Sept. 30. Copper fell as much as 3.5 percent to $6,460 per metric ton. All of the six metals traded on the London Metals Exchange declined.
The Micex has retreated 14 percent from its April 15 peak amid concern economic growth may slow. The country’s dollar- denominated RTS Index was the world’s best performer last year as an economic recovery boosted the earnings outlook of oil and metals producers. The RTS slumped by 4.1 percent today to 1,379.88.
“The double-whammy for Russian assets is again the combination of global risk aversion and weaker oil,” Chris Weafer, chief strategist at UralSib Financial Corp. in Moscow, said in an e-mailed note. “The main question in the investment industry this morning is ‘what do the German regulators know/fear that we don’t?’”
The Ukrainian Equities Index fell the most among equity markets worldwide, losing 10 percent to 1,859.56. The index, the best performer this year among more than 90 major stock gauges as of the end of April, has dropped 27 percent in May, the world’s biggest slump for the month.
VAT Ukrnafta, Ukraine’s largest crude oil producer, retreated 11.9 percent to 218 hryvnia. Ukraine’s PFTS Index of equities lost 5.3 percent to 768.09 today, its lowest close since March 5.
To contact the reporter on this story: Jason Corcoran at Jcorcoran13@bloomberg.net
To contact the editor responsible for this story: Gavin Serkin at firstname.lastname@example.org