Bloomberg News

Russia Stocks Tumble to 1-Week Low as Brent Drops, Rosneft Falls

June 05, 2012

Russian stocks fell to a one-week low, led by OAO Rosneft, the country’s biggest oil producer, as declining brent prices outweighed bets global policy makers will take steps to spur growth.

The Micex Index (INDEXCF) retreated 0.7 percent to 1,297.04 by the close in Moscow, erasing an earlier gain of 1.1 percent and falling to the lowest level since May 28. The benchmark gauge tumbled 11 percent last month, the most since September. Rosneft and smaller rival OAO Lukoil tumbled at least 1.2 percent. OAO Norilsk Nickel fell 0.8 percent after the Russian government increased the nickel export tariff by 16 percent.

Brent oil sank as much as 1.2 percent. Finance ministers and central bank governors from the Group of Seven countries agreed to coordinate their response to Europe’s financial crisis on a conference call that dealt with Spain and Greece. Euro-area services and manufacturing output contracted in May, adding to signs the economy is suffering under the worsening sovereign- debt crisis.

“With the absence of concrete decisions from Europe and with London trading closed, the Russian market is very volatile and is declining,” Andrey Kuznetsov, an equities analyst at Citigroup Inc. in Moscow, said by phone.

Russia received almost 50 percent of budget revenue from oil and gas sales last year. The London markets were closed today for a public holiday. The Micex will trade on June 9 and be closed on June 11-12 for public holidays.

Redemptions

Russia-dedicated equity funds posted redemptions for the seventh week in eight, registering a net outflow of $8.2 million in the week ended May 30, according to EPFR Global. Developing- nation equity funds registered outflows of more than $1 billion for the fourth consecutive week, the longest streak since the third quarter of 2011.

The dollar-denominated RTS Index rose 0.5 percent to 1,246.40, the highest level since May 30.

The MSCI Emerging Markets Index rose 0.6 percent to 887.40 today, the most since May 29, while the MSCI BRIC Index of shares traded in India, Brazil, Russia and China, added 0.2 percent.

Russian stocks trade at 4.7 times estimated earnings, the cheapest level since November, having lost 7.8 percent this year. That compares with a 3.2 percent drop for the MSCI Emerging-Market Index (MXEF) which trades at 9.6 times projected earnings.

To contact the reporter on this story: Ksenia Galouchko in Moscow at kgalouchko1@bloomberg.net;

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


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