Russian (INDEXCF) equities dropped for a second day as oil and gas stocks led declines after the World Bank cut its global growth forecast and concern U.S. debt limits will derail a recovery pared appetite for riskier assets.
The Micex Index lost less than 0.1 percent to 1,514.86 by the close in Moscow after falling as much as 0.5 percent earlier. Of the 50 stocks in the gauge, 24 climbed and 26 retreated. OAO Novatek, Russia’s largest independent natural gas producer, dropped 2.7 percent. OAO Rosneft, the nation’s biggest oil producer, fell 1.3 percent. Oil and gas shares sank 0.6 percent on average, the most of nine industry groups.
Emerging-market stocks fell to a two-week low after the World Bank yesterday cut its global growth forecast for this year as austerity measures, high unemployment and low business confidence weigh on economies. With as little as a month until the U.S. runs out of money to pay its bills, President Barack Obama warned Republicans in Congress not to use the need for a debt-limit increase to force through new spending cuts.
“Investors are concerned about the U.S. debt ceiling, they realize that the limit can’t continue to be raised because this eats up the nation’s economic future,” Sergey Kucherenko, who manages about $50 million in Russian equities at Nomos Bank in Moscow, said by phone. “Since the American economy is the largest, Russian investors are keen to see the debt issue resolved.”
The amount of shares traded on the Micex was 49 percent above the 30-day average, data compiled by Bloomberg show. OAO Gazprom, Russia’s largest company and natural gas export monopoly, dropped 1.1 percent to 146.33 rubles. The stock has a 14.8 percent weighting on the index.
Russia yesterday left borrowing costs unchanged this month and dropped a phrase that money-market rates are acceptable for the “nearest future,” a sign interest rates may be cut as early as next month to bolster growth.
The Washington-based bank World Bank yesterday projected the world economy will expand 2.4 percent, down from a June forecast of 3 percent, after growing 2.3 percent in 2012. It halved its forecast for Japan, cut the U.S. projection by 0.5 percentage point and predicted a second year of contraction in the euro region. It also lowered projections for emerging markets led by Brazil, India and Mexico.
OAO Raspadskaya, a coal producer, rose as much as 1.8 percent before closing up 1.2 percent at 69.12 rubles, the highest level since Oct. 18. Evraz Plc (EVR), the Russian steelmaker part-owned by billionaire Roman Abramovich, said today it has completed the acquisition of Raspadskaya, according to a statement. Evraz added 0.7 percent to 287.30 pence in London.
OAO Magnit, the nation’s biggest food retailer by market value, surged 4.6 percent to 5,370.60 rubles, the highest level since July 2006. The amount of shares traded was 94,096, equivalent to 1.6 times the three-month average, according to data compiled by Bloomberg.
Bank of America Corp. Merill Lynch raised Magnit’s global depositary receipts to buy, citing “stronger” margin assumptions.
The RTS Index (RTSI$), Russia’s dollar-denominated equity gauge, decreased 0.3 percent to 1,571.15. The Bloomberg Russia-US stocks (RUS14BN) measure fell 0.2 percent to 101.18 yesterday.
OAO Mobile TeleSystems declined as much as 0.9 percent before closing up 0.2 percent at 247.75 rubles. Russia’s largest telecoms operator said its Uzbek unit filed for bankruptcy after being unable to pay a $600 million fine to the country’s authorities.
The Market Vectors Russia ETF (RSX:US), the largest dedicated Russian exchange-traded fund, slid 0.2 percent to $29.83.
Standard & Poor’s GSCI Index climbed 0.1 percent to 652.50. The Russian Depositary Index (RDXUSD) lost 0.4 percent to 1,771.32. All metals fell on the London Metal Exchange, including nickel, tin and lead.
Russian stocks pared losses after industrial production in the U.S. climbed 0.3 percent, rising for a second month in December as demand picked up for business equipment, showing factories expanded. JPMorgan Chase & Co. (JPM:US), the largest U.S. bank by assets, and Goldman Sachs Group Inc., the fifth-biggest U.S. bank by assets, posted fourth-quarter profit increases, beating analysts’ estimates.
The Micex gauge trades at about 5.6 times estimated earnings and has added 2.7 percent this year. That compares with a multiple of 10.7 times for the MSCI Emerging Markets Index, which has gained 1.3 percent this year.
Russian equities have the lowest valuations based on estimated earnings among 21 emerging markets tracked by Bloomberg.
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