Bloomberg News

Russian Stocks Fall to One-Month Low After Bernanke Comments

August 31, 2012

Russian stocks declined to the lowest in almost a month as investors sold riskier assets after U.S. Federal Reserve Chairman Ben Bernanke didn’t announce additional stimulus measures.

The Micex Index fell 0.5 percent to 1,422.91 by the close in Moscow, the lowest level since Aug. 3 and giving a 2.1 percent loss for the week. The benchmark has rallied 1.1 percent this month. OAO Lukoil retreated 2 percent, the biggest drop since May 17, as second-quarter profit plunged 69 percent. OAO Novatek, Russia’s second-biggest natural-gas producer, added 0.7 percent as the board recommended raising the first-half dividend.

Bernanke said he wouldn’t rule out more bond purchases to boost growth, while not providing a timeline for any measures. Bernanke’s speech comes two weeks before he leads a meeting of the Federal Open Market Committee to decide whether an expansion of the Fed’s record stimulus is needed to spur growth. Two rounds of large-scale asset purchases totaling $2.3 trillion have so far failed to reduce the jobless rate below 8 percent more than three years into the recovery.

“Investors wanted to see more concrete stimulus measures,” Sergey Fundobny, head of research at Arbat Capital in Moscow, said by phone. “In reality, Bernanke didn’t say anything new. Despite the oil rally, investors are cautious about the Russian market today.”

The dollar-denominated RTS Index increased 0.4 percent to 1,389.72, the first gain in six days.

Lukoil Tumbles

Lukoil fell to 1,836.10 rubles. Russia’s second-largest oil producer posted a profit of $1.02 billion, missing analyst estimates for $2.4 billion, after oil prices fell faster than export taxes.

Nomos Bank gained 12 percent to 784.40 rubles, the most since Oct. 6, 2011. Otkritie Financial Corp. said it plans to acquire the Russian lender over the next two years and offered to buy out minority shareholders at a premium. The shares rose 14 percent to $12 in London.

Crude oil, Russia’s chief export earner, rose 1.9 percent to $96.37 in New York, increasing for the first time in three days. Oil and gas contribute about 50 percent to Russia’s state revenue. Brent crude climbed 1 percent to $113.80.

OAO Gazprom Neft climbed 1.6 percent to 151.48 rubles. OAO Transneft, Russia’s oil pipeline operator, jumped 1.1 percent to 52,759 rubles.

Surgut, Federal Grid

Preferred shares of OAO Surgutneftegas added 11 percent this month, the biggest advancer on the Micex. OAO Rostelecom and preferred shares of OAO Sberbank, the nation’s largest lender, rose 11 percent and 8 percent respectively.

Federal Grid Co., Russia’s high-voltage power transmission monopoly, dropped 12 percent this month, the biggest decliner. OAO Raspadskaya coal producer lost 11 percent, the second- biggest.

Russian equity funds attracted $90 million in the week ended Aug. 29, according to VTB Capital’s research note, which cited EPFR data.

The Micex trades at 5.3 times estimated earnings and has rallied 1.5 percent this year. That compares with a multiple of 9.9 times and a 3.6 percent advance for the MSCI Emerging Markets Index.

Russian equities have the lowest valuations based on estimated earnings 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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