Russian shares tumbled to a November low, falling 10 percent from the highest level this year, as OAO Gazprom slumped and crude oil, the country’s main export earner, halted its advance. Volatility surged.
The Micex Index retreated 1.8 percent to 1,400.44 by 2:41 p.m. in Moscow, the lowest intraday level since Nov. 30 and a 10 percent drop from this year’s high on Jan. 28. Trading volumes were 12 percent above the 30-day average, while 10-day price swings rose to 12.93, the most since March 28. Metal producers OAO Magnitogorsk Iron & Steel, OAO Severstal and OAO Novolipetsk Steel fell at least 4 percent.
Crude oil, which together with natural gas accounts for about half Russia’s budget revenue, retreated 0.2 percent to $94.46 per barrel in New York. Most metals dropped in London, including tin, copper and zinc. Gazprom, Russia’s biggest company and natural-gas export monopoly, lost 2.7 percent to 125.90 rubles, the lowest intraday level since April 2009. The stock has the third-biggest weighting on the Micex.
“Investors are cutting their Russian holdings,” Mark Rubinstein, head of research at Metropol IFC in Moscow, said by phone. “Gazprom is dragging the whole index down. Metals are down and metal producers are slumping.”
OAO Rosneft dropped 2.6 percent to 220 rubles, the lowest since Oct. 23. Russia is considering selling a 19 percent stake in the nation’s biggest oil producer this year, Economy Minister Andrei Belousov told reporters.
OAO Mechel, a coking coal and steel producer, fell 4.7 percent to 141.20 rubles. The dollar-denominated RTS Index sank 1.5 percent to 1,431.70.
The Relative Strength Index on the Micex was about 32. A value below 30 signals the index has been oversold and may reverse losses.
Local stocks fell the most since Nov. 13 on March 18 on concern Cyprus’s plan to rescue its economy through a tax on savings accounts may affect $60 billion of loans and deposits from Russia. Cyprus is the biggest direct investor into Russia and the chief recipient of Russian investment abroad because of a double-tax avoidance treaty and low tax rates, according to Russia’s central bank.
Metal producers led the retreat in London. NLMK fell 4.5 percent to $15.41 in London trading, while Severstal lost 4.1 percent to $8.28.
OAO Rostelecom, the country’s biggest fixed-line phone operator, fell as much as 1 percent before trading down 0.5 percent at 115.50 rubles. Konstantin Malofeev’s Marshall Capital Partner annuled the sale of its 11 percent stake in Rostelecom to billionaire Arkady Rotenberg, according to a statement. Rotenberg’s company agreed to buy the shares from Marshall for an undisclosed amount in February.
“The loss of an influential shareholder such as Rotenberg may cause a negative market reaction,” Alfa Bank analysts Elina Kulieva and Dmitry Doronin said in an e-mailed note.
At the same time, the cancelation of the deal “may reduce fears that Rostelecom will use non-market methods when expanding into the mobile segment,” the Alfa Bank analysts said. That would be “positive for MTS, VimpelCom and MegaFon.”
OAO Mobile TeleSystems traded steady at 266.22 rubles after rising as much as 1.3 percent.
The RTS Volatility Index, which measures expected swings in stock futures, climbed 8.6 percent today to 20.80, the fourth day of gains and the biggest jump since March 18 on a closing basis. The Market Vectors Russia ETF, the largest dedicated Russian exchange-traded fund, added 0.2 percent to $27.64 yesterday. The Bloomberg Russia-US Equity Index increased 0.6 percent to 96.45 in New York.
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 4.4 percent this year, compared with 10.4 times for the MSCI Emerging Markets Index, which has slid 2.8 percent this year.
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