Bloomberg News

Russia Stocks Fluctuate as China Drags Down Oil, Utilities Rise

June 24, 2013

Russian stocks swung between gains and losses as crude fell on concern China’s economy may be threatened by cash constraints.

The 50-stock benchmark Micex Index (RTSI$) added 0.1 percent to 1,300.40 by 11:28 a.m. in Moscow. The Russian Volatility Index rose 4.6 percent. Utilities led the advance among nine sector groups, adding 0.9 percent on average. OAO Bashneft, an oil producer, fell 0.7 percent.

Crude oil, Russia’s chief export earner, dropped 0.9 percent to $92.86 a barrel as the People’s Bank of China said yesterday the nation should fine-tune its policies as a cash squeeze risks exacerbating an economic slowdown. Both Goldman Sachs Group Inc. and China International Capital Corp. reduced their 2013 economic growth forecasts for China to 7.4 percent.

“There’s a sense in the market that the situation isn’t all that rosy,” Sergey Kucherenko, who manages about $50 million in Russian equities at OAO Nomos Bank in Moscow, said by phone. “Oil is particularly sensitive to the risks of Chinese growth stalling.”

President Vladimir Putin announced plans on June 21 to curb price growth by capping annual tariff increases to the previous year’s inflation rate. OAO Inter RAO UES surged 2.1 percent to 1.26 kopeks, while OAO Russian Grids increased 1.8 percent to 1.069 rubles.

“Putin’s comments provided clarity” on the government’s price policy, Kucherenko said.

Bank Rossii held its refinancing rate at 8.25 percent on June 10 after inflation accelerated for a second month in May to the fastest pace in 21 months.

Slowing Growth

Data this week may show U.S. durable-goods orders rose and house prices continued to recover, according to Bloomberg surveys of economists, adding to the Federal Reserve’s case to scale back U.S. monetary stimulus later this year.

Russian stocks slumped on June 20 after the U.S. Federal Reserve Chairman Ben S. Bernanke said the regulator will probably taper its bond buying later in 2013 and halt purchases around mid-2014 if the world’s largest economy performs in line with projections.

Russia’s economy grew 1.6 percent in the first three months, decelerating for a fifth quarter and missing the medium-term target of 5 percent set by Prime Minister Dmitry Medvedev, the slowest pace since 2009.

Cheapest Valuations

The dollar-denominated RTS Index, which entered a bear market on June 5, retreated 0.2 percent to 1,243.21 after tumbling 3.7 percent last week. Russia’s stocks have the cheapest valuations among 21 emerging markets tracked by Bloomberg.

Brent declined 0.8 percent to $100.10 a barrel in London, the third day of declines. Urals crude lost 0.9 percent to $100.70.

Out of 50 stocks, 34 increased, one was unchanged and 15 dropped on the Micex. The volume of shares traded on the gauge was 8.5 percent below the 30-day average, while 10-day price swings rose to 25.006.

Three stocks on the Micex closed on June 21 at a 52-week low (INDEXCF) and none at highs, according to data compiled by Bloomberg. Sixteen stocks, or 32 percent, were trading above their 50-day moving average.

The Micex trades at 4.9 times its 12-month estimated earnings, having lost 12 percent this year, compared with a multiple of 9.2 for the MSCI Emerging Markets Index, which is down 16 percent.

The Bloomberg Russia-US Equity Index of the most-traded Russian companies in the U.S. added 0.7 percent to 82.38 on June 21.

To contact the reporter on this story: Ksenia Galouchko in Moscow at kgalouchko1@bloomberg.net

To contact the editor responsible for this story: Wojciech Moskwa at wmoskwa@bloomberg.net


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