Bloomberg News

Micex Falls 2nd Day as Oil Drops, Economy Woes Pare Risk Wagers

July 12, 2012

Russian stocks fell for a second day as oil, the nation’s chief export earner, tumbled and concern global growth will falter curbed appetite for riskier assets.

The benchmark Micex Index (INDEXCF) lost 1.1 percent to 1,389.74 by 11:25 a.m. in Moscow. OAO Magnit, Russia’s largest food retailer, dropped 1.8 percent. Oil producers fell, with OAO Surgutneftegas and OAO Tatneft (TATN) slipping at least 0.7 percent. Russia’s biggest coking coal producer OAO Mechel rose 0.7 percent.

Emerging-market (MXEF) stocks tumbled for a seventh day, heading for the longest streak of declines since November. U.S. Federal Reserve minutes from a June meeting yesterday disappointed investors looking for a stronger signal of monetary easing to boost global growth. Crude oil fell 0.7 percent to $85.25 in New York after rising 2.3 percent yesterday. Oil and gas contribute about 50 percent of Russia’s state revenue.

The Fed minutes are “disappointing investors as expected,” Slava Smolyaninov, an analyst at UralSib Capital, said in an e-mailed research note.

Industrial production in the euro area probably failed to grow in May after two months of declines, according to the median estimate of economists in a Bloomberg survey before the European Union’s statistics office publishes the data today. U.S. reports today may show initial claims for jobless benefits and import prices booth declined, based on Bloomberg News surveys of economists.

“All attention will be on the initial jobless claims,” Smolyaninov said.

Easing Policy

A few members of the Federal Open Market Committee said the Fed should ease policy to move the economy toward its targets for full employment and stable prices, according to minutes of the June 19-20 meeting released in Washington yesterday. Several others said more action could be warranted if growth slows, risks intensified or inflation seemed likely to fall “persistently” below their goal.

Standard & Poor’s GSCI Commodity Index fell 0.3 percent to 610.82 after gaining 1.1 percent yesterday.

Russia’s benchmark index, which has added less than 1 percent this year, trades at 5.2 times estimated earnings. That compares with 9.4 times projected earnings for the average company on the MSCI Emerging Market Index, which has gained 0.4 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 kgalouchko1@bloomberg.net

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


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