BLBG:Russian Stocks Head for First Drop in Five Days as Oil Declines
Russian stocks headed for their biggest drop in a week as oil gave up its advance after Standard & Poor’s said Germany and France may be stripped of their AAA credit ratings.
The Micex Index (INDEXCF) lost 0.7 percent to 1,506.61 by 11:09 a.m. in Moscow, moving toward its first decline since Nov. 29. Steelmaker OAO Magnitogorsk Iron & Steel fell 2 percent, poised for first drop since Nov. 22. VTB Group, Russia’s second biggest bank, slipped 1.4 percent. The dollar-denominated RTS Index retreated 1.3 percent to 1,539.48. Both OAO Rosneft and OAO Lukoil moved lower.
Crude futures in New York dropped from the highest in almost three weeks, sliding as much as 0.6 percent after S&P said it would change the rating outlook for 15 euro nations, including the two largest. Russia, the world’s biggest energy exporter, counts Europe as its top trading partner and the largest market for state-run OAO Gazprom. (OGZPY) Companies in the Moscow-based Micex index trade at an average 5.2 times analysts’ profit estimates, the lowest valuation among 21 major emerging markets tracked by Bloomberg.
“Investors collectively remain skeptical about how fixable the problems are in Europe,” said Lewis Kaufman, a Santa Fe, New Mexico-based money manager at Thornburg Investment Management, who oversees the Thornburg Developing World Fund. “There is relatively good value in a lot of blue-chip Russian stocks but it’s very hard to quantify adverse developments in Europe and what they could mean if things go awry.”
Crude Price
Crude for January delivery on the New York Mercantile Exchange lost 0.2 percent to $100.79 a barrel as of 10:55 a.m. Moscow time. Prices are up 10 percent this year.
Brent oil for January settlement slid 25 cents to $109.56 on the London-based ICE Futures Europe exchange while Urals crude, Russia’s chief export blend, retreated 0.4 percent to $110.19. Oil and natural gas contribute about 17 percent of Russia’s gross domestic product.
Germany, France, the Netherlands, Austria, Finland and Luxembourg, the euro area’s six AAA rated countries, are among the nations being placed on “CreditWatch negative,” pending the result of a summit of European Union leaders on Dec. 9, S&P said.
Rosneft, Lukoil
OAO Rosneft, Russia’s biggest oil company, declined 0.6 percent to 223.28 rubles, heading for its biggest drop since Nov. 24. OAO Lukoil, the largest private oil producer, fell 0.6 percent to 1,717.10 rubles.
The ruble depreciated for a fourth day, weakening 0.7 percent to 31.0975 against the dollar. OAO Sberbank, Russia’s biggest bank, retreated 1.3 percent, to 88.83 rubles. VTB dropped 1.4 percent to 7.045 kopeks, heading for its biggest downward move since Nov. 24.
The Micex has lost 11 percent in 2011, which compares with a 15 percent slide for Brazil’s Bovespa (IBOV) index, which trades at 10.6 times estimated earnings, according to data compiled by Bloomberg. The Shanghai Composite Index (SHCOMP) trades at 11.1 times estimated earnings, and the BSE India Sensitive Index (SENSEX) has a ratio of 14.4.
To contact the reporters on this story: Denis Maternovsky in Moscow at dmaternovsky@bloomberg.net; Leon Lazaroff in New York at llazaroff@bloomberg.net
To contact the editor responsible for this story: Gavin Serkin at gserkin@bloomberg.net
