Russia's Micex Index Falls Most Ever After Dollar Rates Double
By Bradley Cook
Sept. 16 (
Bloomberg) -- Russia's Micex Index fell the most since Bloomberg began tracking the measure in May 2001, losing 14 percent, after the cost of borrowing in dollars overnight more than doubled and as oil prices tumbled.
OAO Sberbank and OAO VTB Group, Russia's two biggest banks, led the decline in Moscow, falling 14 percent and 16 percent respectively. Financial stocks worldwide slid after American International Group Inc., the biggest U.S. insurer, had its credit ratings downgraded. OAO Rosneft, the government-controlled oil producer, lost 10 percent.
The ruble-denominated Micex plunged 14 percent to 919.24 at 4:11 p.m. in Moscow, the lowest level in almost three years. The dollar-denominated RTS Index dropped 10 percent to 1,151.16, a 54 percent retreat from its highest close of 2,487.92, on May 19.
``It's panic,'' said Oleg Vorotnitsky, head of equity trading at Uralsib Financial Corp. in Moscow. ``There are problems with liquidity on the market. People are having problems with refinancing their positions so they started selling. Concern about AIG in the U.S. is adding to the panic.''
The overnight dollar rate soared 333 basis points to 6.44 percent today, its biggest jump, according to the British Bankers' Association. Rates climbed yesterday after Lehman Brothers Holdings Inc. succumbed to mounting credit-market losses and filed for bankruptcy.
Sberbank sank 14 percent to 38.62 rubles. VTB plunged 16 percent to 3.87 kopeks.
Rosneft Drops
Rosneft, Russia's biggest oil producer, fell 17.01 rubles, or 10 percent, to 161.98 rubles, the lowest since its IPO in 2006. OAO Novatek, Russia's second-biggest natural-gas producer, sank 17.96 rubles, or 14 percent, to 112.05 rubles.
OAO Gazprom, Russia's biggest corporate borrower, declined 10.4 percent to 174 rubles ($6.81), less than half its all-time high of 367.54 rubles on May 19.
Crude oil tumbled, dipping below $91 a barrel and taking its two-day decline to more than $10 on concern that turmoil on Wall Street may weaken the global economy and reduce demand.
``For now, we expect the oil price and global financials to dictate moves on the Russian market,'' JPMorgan Chase & Co. strategist Peter Westin in Moscow wrote in a note to investors. ``The outlook for Russian equities today is anything but cheerful.''
To contact the reporter on this story: Bradley Cook in Moscow at
bcook7@bloomberg.net.
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