Russian stocks fell as crude oil, the nation’s chief export earner, retreated, while concern global growth will slow curbed demand for riskier assets.
The Micex Index (INDEXCF) dropped 0.2 percent to 1,436.52 by the close in Moscow, after rising as much as 0.3 percent earlier. OAO Mechel (MTLR), a coking-coal producer, slumped 2.6 percent, while OAO Sberbank, the nation’s largest lender, declined 1.1 percent. United Co. Rusal, the world’s biggest aluminum producer, rallied 3.4 percent as aluminum rose in London.
The European Union’s rating outlook was cut to negative by Moody’s Investors Service ahead of a meeting of regional policy makers this week. U.S. manufacturing contracted for a third month in August, a report showed today, while crude dropped 1.1 percent to $95.38 in New York. Oil and gas contribute about 50 percent to Russia’s state revenue.
“Investors are watching the global markets,” Sergey Kucherenko, who manages about $50 million in the country’s equities at Nomos Bank in Moscow, said by phone. “European leaders are battling over a very complicated issue, whether the European Central Bank should offer support for risky assets.”
China should “decisively” expand the strength of its fine-tuning after changes in the economy and markets, the official People’s Daily newspaper said in a front-page essay yesterday. European Central Bank President Mario Draghi told officials yesterday he would be comfortable buying three-year government bonds to cut borrowing costs for nations in financial distress.
The Micex trades at 5.3 times estimated earnings and has rallied 2.5 percent this year. That compares with a multiple of 9.9 times and a 3.4 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.
Russia’s inflation accelerated to 5.9 percent in August to near the upper limit of the central bank’s target as food prices grew after a three-month drought.
State asset sales planned for this year may be delayed until next winter or spring, RIA Novosti reported, citing Economy Minister Andrei Belousov. Russia may scrap planned offerings if market conditions deteriorate, Interfax reported.
“Investors didn’t expect asset sales to start this year since so little time remains,” Alexey Debelov, the chief investment officer at the Moscow-based Third Rome, which manages about $400 million in Russian assets, said by phone. “The government is going to wait for better market conditions, it’s not desperate to sell assets.”
Russia in June approved an asset sale plan that includes stake reductions in OAO Rosneft and Sberbank and targets sales of 300 billion rubles this year. Sberbank dropped to 93.13 rubles, the lowest level in a week.
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