RusEnergy

July 06, 2009 - Bloomberg by William Mauldin - Russian shares fell for a third day as oil retreated below $65 a barrel and a report showed the country’s economic slump deepened. OAO Gazprom, the world’s biggest natural-gas producer, and OAO Tatneft, the oil company in Russia’s republic of Tatarstan, dropped more than 4 percent. The 30-stock Micex Index retreated 3.7 percent to 938.38 at 1:59 p.m. in Moscow as all 28 members declined. The ruble weakened to the lowest against the dollar in a month. Crude fell to a five-week low in New York as a stronger dollar limited investor appetite as an inflation hedge and concern deepened the global economic recovery will falter. Russia is the world’s largest energy supplier, and oil and gas producers make up 57 percent of the Micex Index. “The downtick in oil prices will doubtlessly put pressure on stocks,” said Ron Smith, head of research at Alfa Bank in Moscow. Russian stocks entered a bear market last month after the Micex fell more than 20 percent in three weeks from this year’s high on June 1. The index is up 51 percent this year. The equity market “downside” is protected since oil and gas stocks are currently trading as if oil had fallen to about $50 a barrel, Smith said. The Russian economy contracted at an annual 6.4 percent in the second quarter after a 5.4 percent drop in the first quarter, according to VTB Capital’s gross domestic product indicator released today.
Ruble Weakens: Russia’s gross domestic product will probably shrink 7.3 percent this year, according to Bank of America Corp., which earlier forecast a contraction of 4.9 percent. The ruble dropped 0.6 percent to 31.4686 to the dollar, the weakest since May 21. It was little changed at 43.8289 against the euro. Gazprom, the country’s biggest publicly traded company, dropped 4.3 percent to 148.10 rubles on the Micex Stock Exchange. Tatneft slipped as much as 4.7 percent to 112.51 rubles. OAO Novolipetsk Steel, the steelmaker controlled by billionaire Vladimir Lisin, fell 5.3 percent to 65.27 rubles, breaking a six-day streak of gains. KIT Finance cut its recommendation on the shares to “hold” from “buy,” citing the stock’s advance. “It’s a good opportunity to switch from Novolipetsk” to OAO Magnitogorsk Iron & Steel, Moscow-based KIT Finance analyst Kirill Chuiko said by telephone. “Given the potential raw- materials weakness, which we don’t believe will disappear, the profit of Magnitogorsk will be more stable.” Magnitogorsk, Russia’s third-biggest steelmaker, dropped 3.2 percent to 15.013 rubles. OAO GMK Norilsk Nickel, Russia’s biggest mining company, slumped 5.3 percent to 2,663.03 rubles. Nickel for three-month delivery dropped 3.7 percent to $15,605 a metric ton on the London Metal Exchange.
London Debut: OAO RusHydro, Russia’s state-controlled hydropower producer, traded at $4 upon listing global depositary receipts on the London Stock Exchange today. The company’s shares in Moscow rose 1.6 percent to 1.256 rubles (3.99 cents). Each RusHydro GDR represents 100 ordinary shares of RusHydro. OAO Sberbank, Russia’s biggest bank and the largest holder of ruble deposits, sank 3.8 percent to 37.05 rubles. A weaker local currency can lead to Russians withdrawing or converting ruble deposits, the bank’s primary means of funding.