Bloomberg News

Micex Slides as Greece Impasse Curbs Risk Wagers, Crude Retreats

January 24, 2012

Jan. 24 (Bloomberg) -- Russian stocks slid to their lowest in a week, erasing yesterday’s gains, after oil retreated and stalled Greek debt talks reduced investor appetite for riskier assets.

The 30-stock Micex Index retreated 0.7 percent to 1,488.70 by the 6:45 p.m. close in Moscow, the lowest since Jan. 17. OAO Rosneft and OAO Lukoil, the country’s two biggest oil producers with a combined 23 percent weighting in the gauge, slid 2.1 percent and 1.7 percent, respectively. The dollar-denominated RTS Index slipped 0.5 percent to 1,514.93, dropping from its highest close since Dec. 5.

European stocks fell after the region’s finance ministers balked at putting up more public money for Greece, calling on bondholders to provide greater debt relief to point the way out of the two-year-old debt crisis. Crude, Russia’s main export earner, sank as much as 1.3 percent to $98.25 a barrel in New York.

“It’s risk off today clearly because of Greece,” Peter Westin, chief strategist at Aton Capital in Moscow, said by phone. “The more stalling that goes on then the more investors fear there might be contagion.”

Rosneft declined to 228.63 rubles, while Lukoil dropped to 1,783.1 rubles, its lowest close since Jan. 16. OAO Gazprom, the state-controlled gas export monopoly, retreated 0.5 percent to 183.2 rubles, erasing yesterday’s 0.3 percent advance.

The Micex is up 6.2 percent this year and trades at 5.6 times analysts’ earnings estimates for member companies.

The gauge retreated 17 percent in 2011, compared with an 18 percent drop for Brazil’s Bovespa index, which is valued at 9.9 times estimated earnings according to data compiled by Bloomberg. The Shanghai Composite Index trades at 9.5 times estimated earnings, and the BSE India Sensitive Index has a ratio of 15.

‘Messy’ Politics

Grigory Yavlinsky, an opposition presidential candidate, accused Prime Minister Vladimir Putin yesterday of trying to bar him from the presidential poll to ensure a first-round victory.

Protesters took to the streets last month after Putin’s party retained a parliamentary majority in Dec. 4 elections that observers say were marred by ballot box fraud. Putin is vying to return to the presidency for a third term after stepping down because of term limits in 2008. The presidential election will be held on March 4.

“The uncertainty created by the protests makes people a little nervous about Russia,” Geoffrey Dennis, a global emerging-markets strategist at Citigroup Inc., said by phone in New York yesterday. “We’re not recommending investors chase Russia at this point because the politics will remain messy.”

Pulling Back

Daily volumes in RTS futures reached a three-month low on Jan. 3 as investors pulled back from the market, Luis Saenz, chief executive officer of the U.S. unit of Moscow-based brokerage Otkritie, said by phone in New York yesterday. Otkritie manages about 38 percent of futures and options trading on the RTS, according to Saenz.

“Because of the political cloud over Russia, investors are trading roughly half the volume that they did last quarter before the parliamentary elections,” he said. “This is going to be a major theme until at least the first week of March.”

--With assistance from Halia Pavliva in New York and Jason Corcoran in Moscow. Editors: Alex Nicholson, Peter Branton

To contact the reporters on this story: Denis Maternovsky in Moscow at dmaternovsky@bloomberg.net; Leon Lazaroff in New York at llazaroff@bloomberg.net

To contact the editor responsible for this story: Gavin Serkin at gserkin@bloomberg.net


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