Russian stocks dropped the most in more than two months as oil fell and concern China will take steps to cool inflation damped investors’ appetite for riskier assets.
OAO Polymetal, a Russian gold and silver producer, fell 3.2 percent, while OAO Gazprom, the country’s natural-gas export monopoly, dropped 2.2 percent. OAO Uralkali, a potash producer, declined 3.4 percent. These declines helped push the Micex Index (INDEXCF) 1.7 percent lower to 1,733.89 by the 6:45 p.m. close in Moscow, its biggest loss since Nov. 16.
China’s growth accelerated to 9.8 percent in the fourth quarter, exceeding the 9.4 percent median estimate in a Bloomberg news survey of 22 economists and driving speculation that an interest-rate increase may be imminent to cool the expansion. Crude oil for February delivery fell $2.51, or 2.8 percent, to $88.35 a barrel at 11:05 a.m. on the New York Mercantile Exchange. Oil is Russia’s chief export earner.
“China is one of the main risks to growth that we are worried about” as the country tries to curb inflation, said Dmitri Kryukov, founder of Moscow-based hedge fund Verno Capital, which last month hired Renaissance Capital’s Roland Nash as chief strategist. “It could lead to a sudden withdrawal of liquidity.”
Kryukov, whose fund received a $100 million investment from an Abu Dhabi sovereign wealth fund in November, predicts Russian equities could be hit by a correction of 10 percent to 15 percent from current levels. “We are cutting some of our long- only exposure and are buying protection in case,” he said by phone from Moscow.
Copper for delivery in three months dropped 2.4 percent to $9,350 a metric ton on the London Metal Exchange. All metals traded on the LME retreated. OAO GMK Norilsk Nickel, Russia’s biggest miner, fell 0.5 percent to 7,421.97 rubles.
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