Russia’s Micex Index (INDEXCF) fell to the lowest level since October as oil dropped after Greek talks to form a coalition government collapsed, raising concern the region’s debt crisis will worsen.
The 30-stock Micex Index lost 0.7 percent to 1,335.10 by the close in Moscow. OAO Sberbank, the country’s biggest lender, fell 1.5 percent. OAO Rostelecom lost as much as 3.8 percent after its weighting in the MSCI Russia Index was reduced.
Oil fell to a six-month low, losing as much as $2.17 to $91.81 a barrel in New York. New elections in Greece may be scheduled as early as June 10 after President Karolos Papoulias failed to broker a governing coalition in meetings yesterday. German Finance Minister Wolfgang Schaeuble said the vote would be a referendum on whether the country stays in the euro. In Russia, President Vladimir Putin starts consultations with Prime Minister Dmitry Medvedev’s Cabinet candidates today.
“The most important thing is that the Greek political situation won’t be resolved until the new elections,” Dominic Hewing, a portfolio manager at Lanturno Financial Corp., said by phone. “The risk of a Greek exit from the Eurozone is gathering momentum.”
The dollar-denominated RTS fell 1.9 percent to 1,373.82. The index’s 3.6 percent slide on May 14 saw its retreat from this year’s March 19 intraday peak breach the 20 percent threshold analysts say marks a so-called bear market.
Sberbank Stake Sale
Sberbank dropped to 86.88 rubles. Bank Rossii has not ruled out selling a stake in Russia’s biggest lender this year, central bank Chairman Sergey Ignatiev told lawmakers today in the State Duma, the lower house of parliament.
The central bank plans to sell the 7.6 percent stake in the Moscow-based lender as part of the government’s push to reduce its stakes in Russia’s largest state-controlled corporations.
The Micex will follow RTS into a bear market if it declines below 1,311.696, a 20 percent drop from this year’s intraday high on March 15.
Russia is the first of the so-called BRIC countries to enter a bear market in 2012. The BSE India Sensitive Index is down 13 percent from its peak and Brazil’s Bovespa Index is down 17 percent. The Shanghai Composite Index (SHCOMP) has been in a bear market for more than a year.
“Russia’s main exposure to the continuing crisis in the euro zone is the contagion to the price of oil, as concerns grow that a deepening euro-zone crisis may affect global growth and demand for commodities,” Chris Weafer, chief strategist at Troika Dialog in Moscow, said in an e-mailed note.
Russia received almost 50 percent of budget revenue from oil and gas sales last year, according to government estimates. Russia-focused equity funds recorded this year’s biggest outflows for the week ended May 9, posting redemptions of $188 million, according to EPFR Global.
Fitch Ratings cut the credit rating outlook for OAO Magnitogorsk Iron & Steel to negative from stable, citing the company’s 2011 leverage in a report today. Fitch affirmed Magnitogorsk’s rating at BB+. The stock closed up 0.5 percent at 10.392 rubles.
Panagiotis Pikrammenos will head a caretaker government in Greece ahead of a new round of elections on June 17, state-run Athens News Agency reported, without citing anyone.
Russian stocks pared losses as U.S. data showed output at factories, mines and utilities increased 1.1 percent last month, the most since December 2010, after a 0.6 percent decline in March that was revised from no change. Economists forecast a 0.6 percent gain. Earlier today, a report signaled the U.S. residential real estate industry is stabilizing.
MSCI Russia “Reshuffle”
OAO Rosneft, OAO Inter RAO UES and LSR Group had their weighting on MSCI Inc.’s Russia index increased, according to an analyst note by VTB Capital today.
Rosneft became the fourth-biggest Russian stock on the index with a 6.4 percent weighting compared with 4.95 percent for OAO Novatek, according to an e-mailed copy of MSCI Inc.’s report. Novatek shares fell 0.7 percent to 328.23 rubles, while Rosneft rose 1.3 percent to 203.09 rubles.
The changes will see a “reshuffling” in the MSCI Russia 10/40 gauge which “can trigger outflows of up to $301 million from Novatek and inflows of up to $542 million into Rosneft,” VTB Capital analysts led by Alexey Zabotkin wrote today.
OAO Rostelecom, Russia’s dominant fixed-line operator, sank 0.7 percent to 123.70 rubles after its weighting was reduced to 2.3 percent, according to MSCI.
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