Bloomberg News

Russia Stocks Decline as Khodorkovsky Leaves Prison, Crude Falls

December 20, 2013

Most Russian stocks fell as crude oil slid for the first time in three days and after Mikhail Khodorkovsky, the former billionaire owner of Yukos Oil Co., was freed from prison following more than 10 years in detention.

The Micex Index (INDEXCF) slid for the first time in six days, down less than 0.1 percent to 1,497.23 at the close in Moscow, after rising as much 0.3 percent. OAO Lukoil, Russia’s second-biggest oil producer, dropped 0.4 percent to 2,027 rubles, while OAO Surgutneftegas declined 0.6 percent to 25.5 rubles, extending its six-day loss to 5.4 percent. VTB Group, Russia’s second-biggest lender, jumped 2.1 percent to 4.86 kopeks.

Khodorkovsky has been released after a pardon from President Vladimir Putin, the Federal Penal Service said. His arrest more than a decade ago had sent the Moscow index down as much as 15 percent. Crude oil dropped 0.2 percent to $98.61 in New York. Russia receives about half of its budget revenue from oil and natural gas sales.

“Investors are reacting cautiously to the news of Khodorkovsky’s release,” Ovanes Oganisyan, a strategist at MidLincoln Research in Moscow, said by phone. “There’s still a bunch of things that investors are concerned about, like disregard for the rights of minority shareholders.”

Russia’s benchmark index rose for a fifth day yesterday, its longest winning streak since September, adding 3.3 percent.

The market showed a “very reasonable performance for the week -- last active week before Christmas -- so we’re seeing simple profit-taking but not very aggressive,” Kirill Yankovskiy, director for equity sales at UralSib Securities in London, said by e-mail.

Loss of Confidence

Faced with more than $400 billion in capital outflows since 2008 and the slowest economic growth in four years, Putin is seeking to reverse a loss of investor confidence by freeing his country’s most prominent prisoner before his scheduled release in eight months.

Putin signed the clemency decree for Khodorkovsky for humanitarian reasons, the Kremlin said in an e-mailed statement today. About an hour later, the prison service announced Khodorkovsky’s release from a colony in the northern town of Segezha, according to a website statement.

Russia detained more than two dozen people after a rally before Putin’s inauguration last year. Two members of female punk-rock collective Pussy Riot remain in prison after performing a song critical of the president inside Moscow’s main cathedral in February 2012. The two women will be offered freedom under an amnesty, their lawyer said on Dec. 17.

Uralkali Rises

OAO Uralkali added 3.2 percent to 175.4 rubles, rallying for a sixth day, its longest winning streak in a year. Billionaires Mikhail Prokhorov and Dmitry Mazepin closed deals to buy a larger-than-expected 47 percent of Uralkali, the world’s largest potash producer, according to people with direct knowledge of situation.

Prokhorov’s Onexim Group bought 21.75 percent of the Russian crop nutrient producer from billionaire Suleiman Kerimov’s foundation, spokesman Andrey Belyak said by phone. The agreement was announced last month. Another company controlled by Prokhorov bought 5.34 percent that Kerimov held separately, two other people said today, asking not to be identified as the information is private.

The dollar-denominated RTS Index (RTSI$) in Moscow fell less than 0.1 percent to 1,429.91. Russian equities have the cheapest valuations among 21 emerging-market economies monitored by Bloomberg, with shares on the benchmark trading at 4.4 times projected 12-month earnings compared with a multiple of 10.4 for the MSCI Emerging Markets Index.

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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