Bloomberg News

Micex Declines After Biggest Gain in Seven Weeks on Euro Warning

November 30, 2011

Nov. 29 (Bloomberg) -- Russian stocks fell, paring the Micex’s biggest gain in seven weeks, after Moody’s Investors Service warned of downgrades for European banks and the U.S. urged the region’s leaders to act to save the single currency.

The Micex Index retreated 0.8 percent to 1,454.67 by the 6:45 p.m. close in Moscow. The index yesterday surged 3.9 percent, the most since Oct. 6. The dollar-denominated RTS Index slid 0.6 percent to 1,466.36 today.

President Barack Obama renewed pressure on European leaders to prevent a dismantling of the single currency before euro-area finance ministers meet today to seek a resolution to the two- year-old debt crisis. Moody’s said it may cut ratings of lenders in 15 European countries as a “rapid escalation” of the crisis threatens the region.

“The EU only really implements what bond markets want when a crisis forces it upon them,” Julian Rimmer, a trader of Russian shares at CF Global Trading in London, wrote today in e- mailed comments. “Until then we trade up and down on headlines.”

All but seven of the Micex’s 30 component stocks declined, led by pipeline operator OAO Transneft, mining company OAO GMK Norilsk Nickel and coal producer OAO Mechel. Transneft dropped 2.4 percent to 49,403 rubles, while Norilsk Nickel slumped 3 percent to 5,205 rubles and Mechel fell 2.3 percent to 298.1 rubles.

Gazprom Neft, Magnit

Crude oil, Russia’s biggest export earner, erased an earlier loss of as much as $1.09 and climbed $1.33 cents to $99.52 a barrel in New York.

OAO Gazprom Neft, the oil arm of the world’s largest gas producer, dropped 0.3 percent to 138.5 rubles.

OAO Magnit, the country’s biggest food retailer by market value and potash producer OAO Uralkali both rallied.

Magnit rose 0.4 percent to 2,888.7 rubles and Uralkali climbed 0.9 percent to 243.34 rubles.

X5 Retail Group NV surged 5.9 percent to $24.45 in London trading after the retailer said net sales jumped 39 percent to $3.62 billion. The company reported a net loss of $2.1 million in the third quarter after a foreign exchange loss, compared with profit of $79.6 million a year earlier. X5 agreed to acquire Russian discounter Kopeyka for 35 billion rubles ($1.1 billion) in December, beating off interest from Wal-Mart.

“The company has managed to mitigate the negative impact from Kopeyka integration costs, which were scheduled to peak this quarter and now ?5 has completed the integration process of all Kopeyka stores,” Natalia Kolupaeva, an equities analyst at TKB Capital, wrote in a report today.

The Micex has lost 14 percent this year, trading at 5 times analysts’ earnings estimates for member companies. That compares with a 19 percent slide for Brazil’s Bovespa index, which trades at 10.1 times estimated earnings, according to data compiled by Bloomberg. The Shanghai Composite Index trades at 11.4 times estimated earnings, and the BSE India Sensitive Index has a ratio of 13.9.

--Editors: Alex Nicholson, Linda Shen

To contact the reporters on this story: Brad Cook in Moscow at bcook7@bloomberg.net;

To contact the editor responsible for this story: Hellmuth Tromm at htromm@bloomberg.net


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