Bloomberg News

Micex Declines as Oil Retreats, Europe Debt Curbs Risk Appetite

February 27, 2012

Russian stocks fell as the European debt crisis outweighed oil trading near its highest in nine months and after Moody’s Investors Service said Greek default risk remains high.

The 30-stock Micex Index (INDEXCF) declined 0.1 percent to 1,592.66 at the close in Moscow, paring an earlier loss of as much as 0.6 percent. OAO Novatek (NOTK), Russia’s second-biggest natural gas producer, slipped 1.4 percent. OAO Aeroflot (AFLT), the nation’s largest airline, lost 2.1 percent. The dollar-denominated RTS Index advanced 0.4 percent to 1,728.13.

Stocks extended losses after Moody’s Investors Service said Greek default risk remains high. The world economy is “not out of the danger zone” amid fragile financial systems, high public and private debt and rising oil prices, IMF Managing Director Christine Lagarde said this weekend. Oil has advanced 11 percent this year amid concern sanctions against Iran’s nuclear program will disrupt crude supplies from the second-biggest producer in the Organization of Petroleum-Exporting Countries.

“While current oil prices are providing support for Russian markets, they soon will be considered a global economic problem,” Chris Weafer, chief strategist at Troika Dialog, wrote in an e-mailed report today. “Thus, the time that the oil price will actually support markets will be fairly limited, so Russia should make the most of it for the time being.”

Oil, Russia’s main export revenue earner, fell 1 percent to $108.7 a barrel in New York. The contract gained 1.8 percent to $109.77 on Feb. 24, the highest close since May 3. Prices increased 6.3 percent last week.

Sberbank Rises

German lawmakers vote on a second Greek rescue package today. Europe’s biggest economy is also weighing whether to beef up the region’s financial backstop to 750 billion euros ($1 trillion) at a March 1-2 European summit.

OAO Sberbank (SBER), the country’s largest lender, rose 0.5 percent after the rouble strengthened against the dollar. A stronger ruble may discourage Russians from withdrawing and converting local-currency deposits, Sberbank’s main source of funding. Sberbank climbed to 99.54 rubles, its highest since August.

Sberbank may start preparing the central bank to sell a 7.6 percent stake when its share price approaches 100 rubles, Chief Executive Officer German Gref said in comments broadcast on state television on Oct. 28. Sberbank, Europe’s third-largest by market value, is 60 percent owned by the government.

VTB Group, Russia’s second-largest bank, jumped 1.3 percent to 7.31 kopeks. Potash producer OAO Uralkali (URKA) slid 0.8 percent.

The Micex is up 14 percent this year and trades at 6.2 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 10.5 times estimated earnings according to data compiled by Bloomberg. The Shanghai Composite Index trades at 9.6 times estimated earnings, and the BSE India Sensitive Index has a ratio of 15.7.

To contact the reporter on this story: Jason Corcoran in Moscow at jcorcoran13@bloomberg.net

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


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