Russian (INDEXCF) stocks declined for the third day as crude oil dropped and the economy in the U.S unexpectedly shrank in the fourth quarter, stoking concern global growth may slow.
The Micex Index lost 0.2 percent to 1,541.06 by 1:56 p.m. in Moscow, after losing 1.2 percent in the previous two days. Of 50 stocks, 31 dropped, two were unchanged and 17 gained. The dollar-denominated RTS Index (RTSI$) declined 0.1 percent to 1,616.63. VTB Group, Russia’s second-biggest lender, retreated as much as 1.7 percent. Bank Vozrozhdenie dropped as much as 2.6 percent. The Micex’s 50-day volatility fell to 12.256, the lowest level in at least 10 years.
OAO Gazprom, Russia’s biggest company and natural-gas export monopoly, retreated 1.3 percent. Crude oil fell as much as 0.3 percent in New York. Gross domestic product in the U.S. dropped at a 0.1 percent annual rate, weaker than any economist forecast in a Bloomberg survey and the worst performance since the second quarter of 2009, when the world’s largest economy was still in recession, Commerce Department figures showed yesterday.
“U.S. economic growth is expected to slow down this year, and the Russian market is taking profit on this month’s gains today,” Ovanes Oganisian, a strategist at Sberbank Investment Research in Moscow, said by phone. “February is expected to be a volatile month. Bank shares are falling as a reaction to yesterday’s U.S. economic news.”
Russia gets about half of its budget revenue from oil and natural gas. Gazprom has the second-biggest weighting on the Micex at 14 percent.
The number of shares traded on the gauge was 19 percent above the 10-day average, data compiled by Bloomberg show. Standard & Poor’s GSCI Index of commodities declined 0.1 percent to 675.27 after rising 0.8 percent yesterday. All metals gained in London, including lead, nickel and tin.
VTB dropped 1 percent to 5.55 kopeks, poised for the lowest level since Jan. 10. The lender is ready for the “challenge” of a share sale primarily in Moscow after Putin proposed that most offerings for state-controlled companies be held on Russian bourses, RIA Novosti reported, citing VTB Chairman Andrey Kostin.
The Russian Depostiary index added 0.4 percent, with OAO Sberbank (SBER)’s depositary receipts surging 2.9 percent, the biggest gainer. Goldman Sachs Group Inc. (GS:US) reiterated Sberbank as its top banking pick in Russia, citing earnings, “strong” growth potential and its discount to emerging-market stocks.
The Market Vectors Russia ETF (RSX:US), the largest dedicated Russian exchange-traded fund, lost 1.2 percent to $30.59 yesterday. The RTS Volatility Index, which measures expected swings in the stock futures, dropped 0.7 percent to 20.86.
The Micex trades at about 5.7 times estimated earnings and has added 4.3 percent this year. That compares with a multiple of 11 times for the MSCI Emerging Markets Index, which has gained 1 percent over the same period.
Russian equities have the lowest valuations based on estimated earnings among 21 emerging markets tracked by Bloomberg.
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