Russian Stocks Drop With Bonds as Crimea Vote Shakes Sentiment bloomberg - Mar 14, 2014 - Russian stocks fell to the lowest level in almost four years and government bonds declined as tensions between Moscow and the West escalated before residents of Ukraine’s Crimea region vote in a separatist referendum. The Micex Index (INDEXCF) sank 2 percent to 1,248.56, the weakest close since May 2010. The yield on 10-year government bonds rose seven basis points to 9.41 percent, while Russia’s ruble weakened 0.1 percent to 42.9445 against Bank Rossii’s target basket of dollars and euros. The 50-member Micex slumped 14 percent this month as pro-Russian forces surrounded military bases and airports in the Crimea region of Ukraine, which is holding a vote on March 16 on whether to join Russia. German Chancellor Angela Merkel today joined calls for Moscow and Ukraine to hold talks as Russia faced the prospect of European Union sanctions as early as next week if President Vladimir Putin doesn’t “contribute to detente” before the referendum. As “Ukraine tensions persist, everyone is guessing what exactly Putin is going to do after the Sunday referendum in Crimea,” Stanislav Kopylov, who helps manage 45 billion rubles ($1.23 billion) at UralSib Asset Management in Moscow, said by phone today. The 14-day relative strength index for the Micex dropped to 23, its third day below the threshold of 30 that indicates to some technical analysts that a security is oversold. The dollar-denominated RTS Index (RTSI$) gauge lost 2 percent at 1,077.89. U.S. Sanctions OAO Sberbank, the nation’s biggest lender, fell for a sixth day, slumping 4 percent to 69.80 rubles, the lowest level since October 2011. OAO Lukoil, Russia’s second-largest oil company, retreated 3 percent. If Russia doesn’t back down, the U.S. and the international community “will be forced to apply a cost,” U.S. President Barack Obama said after meeting with Ukrainian Prime Minister Arseniy Yatsenyuk yesterday. The Organisation for Economic Co-operation and Development temporarily halted Russia’s accession process, the group said on its website today. The crisis in Ukraine has spurred the worst tension between Russia and the West since the end of the Cold War. Iran-style retaliation from the West, which would include freezing Russia’s foreign reserves, banking assets and halting lending to companies, is being treated as an unlikely worst-case scenario, according to four people with knowledge of the Russian government’s preparations. Restoring ‘Value’ Ukraine’s dollar bonds due April 2023 climbed for the first time in seven days, sending the yield down 18 basis points to 10.64 percent, data compiled by Bloomberg show. The hryvnia weakened 3.3 percent to 9.7000 per dollar. EU foreign ministers are due to meet March 17, a day after Crimea holds the vote, to consider asset freezes and travel bans on Russian political and business leaders they consider responsible for events on the Black Sea peninsula. The yield on Russian bonds maturing in 20207 climbed five basis points to 9.41 percent, taking this month’s increase to 97 basis points. “Russian local bonds entered the recent crisis period looking dramatically overvalued,” Michael Gomez, co-head of emerging markets at Pacific Investment Management Co. LLC in Newport Beach, California, said by e-mail. “The recent correction in the local market, and the surprise tightening from the CBR, have started to restore value in local markets.” Faced with the tension in Ukraine and as the Federal Reserve tapered monetary stimulus, the ruble has slumped 10 percent against the dollar this year, the worst-performer after Argentina’s peso among 24 emerging-market currencies monitored by Bloomberg. Russia’s central bank sought to stem the slump by raising its key interest rate by 150 basis points, or 1.5 percentage points, on March 3 after Putin gained parliamentary approval to commit troops to Ukraine. Policy makers will keep the one-week auction rate, the benchmark introduced in September, at 7 percent at a meeting in Moscow tomorrow, according to 23 of 24 economists in a Bloomberg survey. One analyst forecast a cut to 6.5 percent.
Posted on: Fri, 14 Mar 2014 07:03:02 +0000
Recently Viewed Topics
© 2015