Bloomberg News

RTS Futures Slump on Oil as VimpelCom Tumbles: Russia Overnight

June 13, 2012

Russian stock futures dropped in New York after oil, the nation’s biggest export earner, fell to an eight-month low. VimpelCom Ltd. (VIP:US) declined the most this month as a conflict between shareholders intensified.

RTS stock-index futures expiring on June 15 fell 1.1 percent to 129,450 as the Bloomberg Russia-US Equity Index (RUS14BN) of the most-traded Russian companies declined from a three-week high. OAO Gazprom (OGZPY:US) and OAO Lukoil (LUKOY:US), Russia’s biggest energy companies, dropped at least 1.4 percent. VimpelCom, the world’s sixth-largest mobile-phone company, sank 5 percent after its biggest shareholder Telenor ASA (TEL), requested a Bermuda court to reverse Russian regulators’ claims it couldn’t boost the stake.

Crude oil, which together with natural gas accounted for about 50 percent of Russia’s budget revenue in 2011, extended its decline to 16 percent this year after reports showed U.S. retail sales weakened and euro-area industrial production dropped for a second month in April. Deputy Prime Minister Arkady Dvorkovich said yesterday the government may ease planned increases in the natural-gas extraction tax for crude producers and review oil taxation.

“Russia’s market is very sensitive to oil price, so oil weakness leads the entire market weakness,” Yan Gloukhovski, a trader at Alfa Capital Markets in London, said by e-mail yesterday. “There is also the risk that as oil declines, the Russian budget will receive less revenue and the government could further hike taxes to make up for the shortfall.”

The Market Vectors Russia ETF (RSX:US), the largest dedicated Russian exchange-traded fund, retreated 1.2 percent to $24.87, falling for second day in three. The RTS Volatility Index, which measures expected swings in futures, rose 1.8 percent to 45.15 points.

VimpelCom, RusHydro

The Bloomberg Russia-US Equity Index slid 0.7 percent to 85.14 in New York yesterday. VimpelCom was the biggest decliner on the gauge, losing 5 percent to $7.56, the most since May 30.

Telenor, the Nordic region’s largest phone company, requested yesterday that the Supreme Court of Bermuda confirm it didn’t breach any regulations when purchased 11.3 percent in VimpelCom from Egyptian billionaire Naguib Sawiris’s Weather Investments II SARL.

Russia’s Federal Anti-monopoly Service filed a claim in Moscow court in April asking Telenor to return 234 million of VimpelCom’s preferred shares it bought from Weather, saying Telenor didn’t receive the Russian commission’s permission to raise its stake.

OAO RusHydro (RSHYY:US), Russia’s largest hydropower producer, gained 5 percent to $2.54 in New York trading yesterday, the most since June 6. The stock traded at 4.9 times estimated earnings, a 25 percent discount to the 6.5 average multiple for energy companies (RSHYY:US) on the MSCI Emerging Markets index, the biggest gap since Rushydro listed its American depositary receipts in U.S. in July 2010.

Retail Sales

U.S. retail sales dropped in May for a second month, as limited job and income gains hold back consumers, Commerce Department figures showed in Washington yesterday. Output in the 17-nation euro area slipped 0.8 percent from March, when it fell 0.1 percent, the European Union’s statistics office in Luxembourg said yesterday.

Crude oil for July delivery dropped 0.8 percent, to $82.62 a barrel on the New York Mercantile Exchange yesterday, the lowest settlement since Oct. 6.

Brent oil for July settlement was little changed at $97.13 a barrel on the London-based ICE Futures Europe exchange yesterday. Urals crude, Russia’s chief export blend, fell 1.3 percent to $94.49 a barrel, the lowest since Jan. 27.

Gazprom Valuation

Gazprom, Russia’s biggest company and the world’s largest natural gas producer, retreated 1.6 percent to $9.25 in New York yesterday, sending valuations to 2.97 times estimated earnings, a 70 percent discount to Exxon Mobil Corp (XOM:US) and a 53 percent discount to BP Plc, the cheapest since June 1. The Moscow-based company’s stock was little changed at 152.02 rubles, or $4.68, on the Micex yesterday. One Gazprom ADR is equal to two ordinary shares.

“The discount for Russian companies is due to several factors, including general discount on emerging markets and Russia, unstable taxation regime and lower dividends payout compared with developed markets peers,” Gloukhovski said.

Lukoil, the country’s second-biggest oil producer behind OAO Rosneft (ROSN), lost 1.4 percent to $52.36 yesterday in New York. Lukoil rose 0.1 percent to 1,711.10 rubles, or $52.67, on Russia’s Micex Index.

To contact the reporter on this story: Halia Pavliva in New York at hpavliva@bloomberg.net

To contact the editor responsible for this story: Tal Barak Harif at tbarak@bloomberg.net


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Companies Mentioned

  • VIP
    (VimpelCom Ltd)
    • $8.34 USD
    • -0.04
    • -0.48%
  • OGZPY
    (Gazprom OAO)
    • $7.33 USD
    • -0.17
    • -2.32%
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