Bloomberg News

Russian Stocks Decline as Oil Falls After OPEC Boosts Ceiling

December 14, 2011

Russian stocks fell, erasing an earlier rebound, as oil fell the most in almost a month as the Organization of Petroleum Exporting Countries agreed to raise its production ceiling.

The 30-stock Micex Index (INDEXCF) declined 0.5 percent to 1,372.42 by 6:45 p.m. in Moscow, after earlier advancing 2.1 percent and having climbed by that amount yesterday. Stocks erased their gain in the last hour of trading today. United Co. Rusal, the world’s biggest aluminum producer, fell 4.5 percent. OAO Magnit, the largest food retailer, jumped 3.6 percent. The dollar- denominated RTS Index (RTSI$) fell 1.3 percent to 1,369.65.

Crude oil for January delivery declined as much as $3.63 to $96.51 a barrel in New York after OPEC decided on an output target of 30 million barrels a day. Stocks fell globally today after U.S. Federal Reserve policy makers defied speculation yesterday that they would signal plans for a third round of large-scale asset purchases. U.S. retail sales rose 0.2 percent in November, the slowest pace in five months, Commerce Department figures showed.

“Pessimism was aggravated by data on retail sales that turned out to be below expectations as well as the results from the Fed Reserve meeting which offered no pleasant surprises,” Maria Kalvarskaia, who heads equity research at TKB Capital in Moscow, wrote in an e-mailed report today.

OAO Rosneft, Russia’s biggest oil company, fell 1.1 percent to 204.63 rubles. Oil and natural gas contribute about 40 percent of Russia’s budget revenue and 17 percent of gross domestic product.

The Micex lost 19 percent this year and trades at 4.7 times estimated earnings, the cheapest valuation among major emerging markets. That compares with 10 times for Brazil’s Bovespa index, 10.6 for the Shanghai Composite Index and 13.7 for the BSE India Sensitive Index, according to data compiled by Bloomberg.

Biggest Rally

The Micex fell 7 percent last week on concern political tension after a disputed Dec. 4 parliamentary election would bring instability ahead of a March presidential poll. The country’s biggest demonstrations in at least a decade on Dec. 10 passed peacefully and the Moscow government approved a 50,000- person rally for Dec. 24, a spokesman for the mayor’s office, Boris Bulai, said by telephone today.

“Russian stocks were terribly oversold and at least a portion of the political risk premium has dissipated if only because the protest on Saturday was peaceful,” Julian Rimmer, a trader of Russian shares at CF Global Trading in London, said by e-mail.

To contact the reporters on this story: Jason Corcoran in Moscow at jcorcoran13@bloomberg.net; Denis Maternovsky in Moscow at dmaternovsky@bloomberg.net

To contact the editor responsible for this story: Frank Connelly at fconnelly@bloomberg.net


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