Russia’s stocks fell for the second day after the dollar-denominated gauge tumbled 20 percent from a peak this year as prospects for lower commodity prices damped sentiment in the world’s largest energy exporter.
The RTS Index (RTSI$) lost 0.1 percent to 1,299.47 by 2:40 p.m. in Moscow after yesterday sliding into a so-called bear market. The $2 trillion economy of Russia, which counts on income from oil and gas sales for about half of its budget revenue, is expanding at the weakest pace since a 2009 contraction.
Russia’s “market is struggling to find growth drivers,” Vladimir Bragin, head of research at Alfa Capital in Moscow, where he helps manage $2.9 billion, said by phone. “Liquidity is low, trading volumes have dropped. Investors are looking for an excuse to sell Russia.”
The ruble-based Micex Index (INDEXCF), down 10 percent this year, retreated 0.2 percent to 1,324.30 today as the volume of shares traded was 31 percent below the 30-day average. Crude oil, Russia’s chief export earner, has decreased 3.1 percent this quarter. China, the world’s second-largest consumer of the commodity, is facing “huge challenges” as it seeks 7 percent annual growth this decade, down from more than 10 percent in the previous 10 years, Premier Li Keqiang said last month.
Inflation in Russia accelerated for a second month in May to the fastest pace in 21 months, limiting the central bank’s scope to cut interest rates, the Federal Statistics Service in Moscow said on June 4.
The economy will probably expand 2.3 percent in the second quarter, according to the median estimate of nine economists in a Bloomberg survey. That’s less than the 2.5 percent forecast a month earlier. The Economy Ministry lowered this year’s growth forecast to 2.4 percent from 3.6 percent in April while the central bank kept its refinancing rate on hold for an eighth month in May.
OAO Mechel (MTLR), Russia’s steelmaker and biggest coking coal producer, fell for the seventh day, dropping 4.4 percent to 86.4 rubles, the lowest intraday level since January 2009. Most metals declined in London.
OAO TNK-BP Holding (TNBP), the traded unit of the oil venture that OAO Rosneft bought for $55 billion, tumbled as much as 8.2 percent before trading 3.1 percent lower at 40.21 rubles. The company’s board recommended not paying dividends for 2012, according to a statement today.
Rosneft’s Chief Executive Officer Igor Sechin proposed last month that Rosneft only be accountable for TNK-BP dividends from March 21, the date when it took control of the venture.
Crude oil climbed 0.5 to $94.20 a barrel in New York, while the Standard & Poor’s GSCI Index (SPGSCI) of commodities and brent oil were little changed. Urals crude, Russia’s major export blend, gained 0.2 percent to $102.61.
Russian equities have the cheapest valuations among 21 emerging markets tracked by Bloomberg. The Micex trades at 4.9 times its 12-month estimated earnings, compared with a multiple of 10 for the MSCI Emerging Markets Index. Ten-day price swings on the Micex plunged to 17.94 today, the lowest since May 21.
The Russian Volatility Index rose 1.6 percent to 28.65. The Bloomberg Russia-US Equity Index of the most-traded Russian companies in the U.S. fell 2 percent to 85.43 yesterday.
The RTS’s relative strength index is trading within two basis points of 30, a level that signals to some analysts that a security or gauge is oversold.
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