Geopolitical tensions, weak oil prices drag Russian stocks down

MOSCOW, May 23 (PRIME) -- Geopolitical tensions between the U.S. and North Korea, the news regarding a U.S. trade conflict with China, and a slump of oil prices resulted in contraction of Russian stocks on Wednesday, analysts said.

The MOEX Russia Index fell 1.35% to 2,295.57 and the RTS decreased 2.27% to 1,174.71.

“A possible denial of (U.S. President) Donald Trump to partake in negotiations with (North Korean President) Kim Jong-un raised concerns that the U.S. may start pressurizing North Korea and China in talks around the North Korean nuclear program…The negative environment exerted pressure on the Russian stock market,” Yevgeniya Abramovich, head of the currency risks research department at Swiss brokerage house Dukascopy Bank SA, said.

Sofya Kirsanova, an analyst at managing company Raiffeisen Capital, said that sales in Russian shares were triggered by sales at the world trade floors, and the support of oil prices vanished as the prices no longer rallied.

The Brent oil price decreased 1.57% to U.S. $78.34 per barrel as of 5.45 p.m. Moscow time, according to the ICE exchange.

“Preliminary data on Purchasing Managers’ Indices (PMI) for manufacturing and non-manufacturing sectors of the E.U. economy turned out to be weaker than expected, which cooled down bulls of the European trade floors. Trump said that the deal with China on external trade is unlikely to be achieved easily and that the structure of the trade balance of the two countries has to be changed, and the statements hurt the mood of Asian investors,” Kirsanova said.

Preferred shares of oil company Bashneft lost 5% to 1,737.50 rubles after the company’s board of directors recommended paying 158.95 rubles per share in dividends for 2017. Kirsanova said that the market expected a higher dividend payout.

Igor Kovalyov, an analyst at InstaForex group of companies, said that shares of retailer Dixy Group gained 3.34% to 324.5 rubles. The company’s subsidiary Dixy Yug consolidated a 98.79% stake in the parent company, and now it can buy back the remaining shares for 340 rubles per paper, Kovalyov said.

Below are the MOEX Russia Index’ five most active stocks on Wednesday:

Company	Change, %	Last price, rbl	Trading volume, bln rbl
Sberbank	-2.04	221.00	10.856
Lukoil	-2.22	4263.00	3.385
Gazprom	-0.30	146.06	2.837
Rosneft	-2.04	377.70	1.559
Norilsk Nickel	-1.35	10850.00	1.362

(61.2610 rubles – U.S. $1)

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