Russian shares headed for a third weekly decline as OAO Mobile TeleSystems retreated on concern the country’s largest mobile provider will lose market share.
The Micex Index (INDEXCF) slid less than 0.1 percent to 1,426.50 by 11:30 a.m. in Moscow, set for a 0.8 percent drop in the week. Trading volumes were 69 percent above the 30-day average, while 10-day price swings slumped to 8.129, the lowest since Feb. 12. The dollar-denominated RTS Index (RTSI$) increased 0.3 percent to 1,423.05.
Mobile TeleSystems retreated 0.9 percent to 267.92 rubles, while mobile operator VimpelCom Ltd. (VIP:US) lost 2.9 percent to $11.55 in New York yesterday. State-run lender VTB Group said yesterday it had completed a $3.55 billion acquisition of Swedish Tele2’s wireless business in Russia fuelling speculation the unit will be sold to state-run OAO Rostelecom.
“As a result of the potential merger of Rostelecom and Tele2 Russia’s mobile assets, a new mobile giant may appear,” Alfa Bank analysts said in an e-mailed note today.
The bank may resell the company to Moscow-based Rostelecom in six to eight months once a merger with Svyazinvest is completed, Renaissance Capital has said.
VTB is in talks with Arkady Rotenberg, an investor in Rostelecom, to set up a joint venture with Tele2 Russia, the Vedomosti newspaper reported today, citing people it didn’t identify. A joint venture would create Russia’s fourth-largest mobile operator and Rostelecom has both 3G and 4G licenses, Vedomosti said.
Crude oil slid 0.2 percent to $93.06 in New York. Russia receives about half its budget revenue from oil and natural gas. Out of 50 stocks on the Micex, 39 rose, 10 fell and one was unchanged.
The RTS Volatility Index, which measures expected swings in stock futures, tumbled 7.1 percent today. The Market Vectors Russia ETF, the largest dedicated Russian exchange-traded fund, rose 1.1 percent to $27.05 yesterday. The Bloomberg Russia-US Equity Index (RUS14BN) closed flat yesterday at 94.73.
Russian equities have the cheapest valuations among 21 emerging markets tracked by Bloomberg. The Micex trades at 5.2 times estimated earnings and has lost 3.2 percent this year, compared with 10.3 times for the MSCI Emerging Markets Index, which has slid 3.5 percent this year.
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