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Russia Stocks Drop as Banks, Oil Slide on Europe Crisis Concern

Published: February 26, 2013 | 9:59 am
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Russian stocks fell for the first time in three days as financial stocks dropped and oil, the country’s main export, retreated after Italy’s election spurred concern Europe’s debt crisis will worsen.

The Micex Index (INDEXCF) sank 1.2 percent to 1,486.06 by 10:56 a.m. in Moscow. Of 50 shares, 3 increased and 47 decreased. Financial and health-care stocks led declines, losing at least 1.7 percent. VTB Group, Russia’s second-biggest bank, dropped 1.8 percent, while OAO Sberbank, the nation’s largest lender and the biggest stock in the Micex by weighting, retreated 1.7 percent. The dollar-denominated RTS Index (RTSI$) retreated 2.2 percent to 1,531.21.

Oil fell to a seven-week low before a report that may show U.S. crude stockpiles rose. Oil and natural gas account for about 50 percent of Russia’s state revenue. Candidates seeking to reverse Italy’s austerity measures won about 55 percent of the popular vote in the nation’s election.

“Issues in the European Union will trigger capital outflows from riskier assets, like Russia,” Victor Markov, an analyst at Kapital Asset Management LLC, said by phone from Moscow. “The Italian elections have created a complicated situation where one party failed to get the majority of votes and now it’ll be very hard to pass any laws related to fixing the country’s debt issues. Oil is falling for the same reason.”

The Moscow Exchange, Russia’s main stock and fixed-income exchange, will move from its current system of settling trades on execution to a T+2 mode of two-day settlement of transactions that is the norm in U.S., German and Brazilian markets by March 26 for some equities, spokesman Nikita Bekasov said by e-mail yesterday.

Modernizing Systems
The bourse, which raised $498 million in its Feb. 15 initial public offering, is modernizing its systems and opening up access. The stock fell 1.3 percent to 54.04 rubles in Moscow and is down 1.7 percent from its IPO price.

Thirty-day price swings on the Micex increased to 12.301, while the number of shares traded on the gauge was 25 percent below the measure’s 10-day average, data compiled by Bloomberg show. The ruble dropped 0.2 percent against the dollar to 30.5785. Standard & Poor’s GSCI Index declined 0.6 percent to 654.90.

The Micex trades at about 5.6 times estimated earnings and has added 0.8 percent this year. That compares with a multiple of 10 times for the MSCI Emerging Markets Index, which has lost 1 percent over the same period.

The Market Vectors Russia ETF (RSX), the largest dedicated Russian exchange-traded fund, sank 2 percent to $28.78 yesterday. The RTS Volatility Index, which measures expected swings in the index futures, rose 0.4 percent to 19.98 yesterday. The Bloomberg Russia-US Equity Index (RUS14BN) of the most- traded Russian stocks in the U.S. fell 1.1 percent.

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

businessweek

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