Bloomberg News

Russian Stocks Fall for Second Day as Oil Drops on Europe Summit

January 31, 2012

Jan. 30 (Bloomberg) -- Russian stocks fell for a second day as investors bet emerging-market equity gains are overdone amid concern Europe’s debt crisis will derail the global recovery.

The Micex Index of 30 stocks retreated 0.8 percent to 1,496.30 by the close in Moscow, adding to a 0.4 percent drop on Jan. 27. United Co. Rusal, the world’s largest aluminum producer, and OAO Rosneft, Russia’s biggest oil producer, slid 2 percent and 1.3 percent, respectively. The dollar-denominated RTS Index slipped 1.2 percent to 1,546.59, heading for its biggest drop since Jan. 5.

Developing-nation stocks pared their strongest monthly advance since October on speculation European Union leaders meeting today may fail to resolve the region’s debt crisis. Oil, Russia’s main export revenue earner, fell as much as 0.8 percent to $98.79 a barrel in New York.

The “risk-on hiatus owes as much to month-end as it does anything else,” Julian Rimmer, a trader of Russian shares at CF Global Trading in London, said in an e-mail. “Volatility always cranks up towards month-end, a propensity particularly pronounced when the performance of the four weeks previous has been strongly positive.”

Shares of OAO Novolipetsk Steel and OAO Raspadskaya, a coal producer, dropped more than 3 percent, while OAO GMK Norilsk Nickel, the country’s biggest miner, lost 1.9 percent to 5,701 rubles. Prices of metals including copper, nickel and aluminum retreated as China signalled caution on monetary loosening.

The Micex has gained 6.7 percent this year and trades at 5.7 times analysts’ earnings estimates for member companies.

Opposition Rallies

That compares with an 9.8 percent gain so far in 2012 for Brazil’s Bovespa index, which is at 9.9 times estimated earnings, according to data compiled by Bloomberg. The Shanghai Composite Index trades at 9.4 times estimated earnings, and the BSE India Sensitive Index has a ratio of 14.8.

OAO KamAZ, Russia’s biggest truckmaker, rose 12 percent to 43.61 rubles, the highest level in almost three months after Sergei Chemezov, the head of its state-owned shareholder, said Daimler AG is seeking to gain a controlling stake.

Investors’ appetite for Russian stocks may wane ahead of political demonstrations scheduled for the weekend, Rimmer said.

Russian opposition groups, who accuse Prime Minister Vladimir Putin’s party of inflating its vote in December’s parliamentary elections, plan their next major protest on Feb. 4, a month before the presidential vote.

“Nervousness surrounding the opposition rally this Saturday may temporarily stay the hand of Russian punters this week,” Rimmer wrote.

--Editors: Alex Nicholson, Peter Branton

To contact the reporter on this story: Denis Maternovsky in Moscow at dmaternovsky@bloomberg.net

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


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