Russian stocks fell to the lowest level in three months as OAO Sberbank, the nation’s largest lender, slumped and U.S. elections set up a showdown over the nation’s budget deficit.
The Micex Index (INDEXCF) fell 1.1 percent to 1,407.79 by the close in Moscow, the weakest since Aug. 2. Consumer and banking stocks led the decline as Sberbank, which has the third-largest weighting on the index, sank 4.1 percent. OAO Mosenergo, a utility, tumbled 4.7 percent.
Barack Obama, who was re-elected president yesterday, now faces negotiations to avoid more than $600 billion of automatic tax increases and spending cuts, while anti-austerity protests in Greece and weaker economic data in Asia added to concern global growth may slow, pushing investors to sell riskier stocks. Sberbank reported operating expenses rose 22 percent in the first 10 months of the year.
“Russian investors are concerned the debate between Obama and the Congress will extend and this may pressure the oil prices, which would be very negative for Russia,” Sergey Fundobny, head of research at Arbat Capital Management in Moscow, said by phone.
The number of shares traded in the Micex gauge was 5.6 percent higher than the daily average of the past 30 days, data compiled by Bloomberg show.
Oil rebounded from the lowest level in almost four months, adding 0.3 percent to $84.73 per barrel in New York. Russia receives about 50 percent of budget revenue from oil and gas sales. Standard & Poor’s GSCI Index of 24 commodities gained 0.1 percent to 629.61. The Russia Depositary Index fell 2.1 percent to 1,576.56.
While Obama received at least 303 electoral votes to Republican Challenger Mitt Romney’s 206, Republicans kept a majority in the House of Representatives. Democrats retained control of the Senate.
The Market Vectors Russia ETF (RSX:US), the largest dedicated Russian exchange-traded fund, fell 2.9 percent to $27.56 yesterday. The RTS Volatility Index, which measures expected swings in futures, rose 13 percent to 30 points.
Options traders demanded more protection against fluctuations in Russian stocks over the next six months.
Implied volatility, the key gauge of options prices, for at-the-money contracts on the Market Vectors Russia exchange- traded fund due in six months rose to 29.94 yesterday, and was 26 percent above the level for those expiring in 30 days on Nov. 2, the biggest gap since December 2010, data compiled by Bloomberg show.
OAO Gazprom Neft rose 1.1 percent to 153.01 rubles, the biggest jump in a week. The amount of shares traded was equal to about half of the average three-month volume, according to Bloomberg data.
The oil arm of Russia’s natural-gas exporter increased profit 24 percent in the third quarter after output gained. Net income advanced to 56 billion rubles ($1.8 billion) from 45.3 billion rubles a year earlier, the St. Petersburg, Russia-based company said on its website. That beat the average estimate of 49.3 billion rubles from five analysts surveyed by Bloomberg.
Citigroup Inc. raised Russia’s oil sector to overweight in an e-mailed note today, citing the possibility that OAO Rosneft’s acquisition of TNK-BP will trigger a “more favorable” greenfield oil tax regime.
Citigroup prefers Rosneft and OAO Surgutneftegas’s preferred shares among Russia oil stocks, according to the note. Rosneft fell 1.9 percent to 240.50 rubles, the biggest drop since Oct. 19. Surgutneftegas’s preferred shares rose 1.3 percent to 20.004 rubles.
The Micex trades at 5.4 times estimated earnings after gaining 0.4 percent this year. That compares with a multiple of 10.2 times for the MSCI Emerging Markets Index, which has added 8.7 percent.
Russian equities have the lowest valuations based on estimated earnings among 21 emerging markets tracked by Bloomberg.
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