Russian stocks fell to the lowest level in more than a week, led by oil companies, as concern the global economy is foundering crimped demand for riskier assets.
The benchmark Micex Index (INDEXCF) lost 1.2 percent to 1,405.15 by the close in Moscow. Oil producers OAO Surgutneftegas and OAO Tatneft (TATN) led the retreat, falling at least 2.7 percent. VTB Group declined 3 percent as UBS AG added Russia’s second-largest lender to its list of least-preferred stocks, citing the bank’s reliance on income from trading.
Emerging-market (MXEF) stocks tumbled for a sixth day on bets Europe’s debt crisis will deepen a global economic slowdown and hurt earnings. The Federal Reserve will release today the minutes from its June meeting, during which policy makers lowered their outlook for economic growth. The European Central Bank cut rates to a record low on July 5 on concern the euro area is slipping deeper into a recession.
“Everyone is waiting for the European leaders to announce a solid rescue plan,” Michael Kart, managing partner at Spectrum Partners, who manages $150 million in Russian equities in Moscow, said by phone. “The market might rise if the Fed minutes show active discussions of further monetary easing.”
A total of 32.3 billion shares traded on the benchmark index today, compared with 56.3 billion yesterday, according to the Micex’s website.
Crude oil gained 1.4 percent to $85.05 in New York after falling 2.4 percent yesterday. Oil and gas contribute about 50 percent of Russia’s state revenue. Standard & Poor’s GSCI Commodity Index rose 0.8 percent to 610.60 after slumping 1.6 percent yesterday.
“Today is likely to be a tougher day, or at least until the U.S. Federal Reserve publishes the minutes,” Chris Weafer, chief strategist at Troika Dialog, said in an e-mailed research report. “Before that, investors will react to another steep fall on Wall Street last night.”
U.S. shares fell 0.8 percent to 1,341.47 yesterday.
Russia’s benchmark index, which has added 0.2 percent this year, trades at 5.2 times estimated earnings. That compares with 9.5 times projected earnings for the average company on the MSCI Emerging Market Index, which has gained 1.7 percent this year.
Russian equities have the cheapest valuations among 21 emerging markets tracked by Bloomberg.
To contact the reporter on this story: Ksenia Galouchko in Moscow at firstname.lastname@example.org
To contact the editor responsible for this story: Gavin Serkin at email@example.com