Low oil price drags Russian stocks down as foreign optimism fades

MOSCOW, Dec 18 (PRIME) -- Russian stocks plunged on Friday as the oil price became its main driver anew and foreign optimism of the last few days faded, analysts said.

The MICEX fell 3.47% to 1,719.16 and the RTS decreased 3.33% to 765.73.

“Investors had largely ignored falling oil prices, while Russia–U.S. political relations were warming and on the back of the long-awaited U.S. Federal Reserve System’s key rate hike…But after the inflow of external positive news faded away, and the ruble plunged below 71 against the U.S. dollar, many investors decided to cash in,” Sofya Kirsanova, an analyst at managing company Raiffeisen Capital, said.

The Brent oil price slid 0.379% to U.S. $36.92 per barrel after the U.S. House of Representatives approved a draft bill which lifts the country’s 40-year ban on oil exports.

“Oil, which is trading close to $37 per barrel and may plunge to its lowest since 2008, is an undoubtedly a negative factor. The capital flow dynamics also contributes no optimism, as the EPFR data shows that net outflow from Russia-dedicated funds in the week that ended on Wednesday widened to $78.9 million from $38.4 million a week earlier,” Anton Kochetkov, an analyst at Otkritie Broker, said.

Vitaly Manzhos, a senior analyst at Bank Obrazovanie, said that the Thursday increase of Russian floors was emotional and groundless. “After the euphoria connected with the Fed’s predictable decision had vanished, participants of the Russian market remembered about the conditions of the oil market, which is not at its best,” Manzhos said.

The weak ruble and capital outflow hurt Sberbank, whose common and preferred shares lost 4.76% to 98.81 rubles and 7.41% to 68.24 rubles, respectively, Kirsanova said.

Low-liquid shares of Pharmacy Chain 36.6 rose 5.50% to 16.30 rubles as media reported that it may merge with another key player at the market, Pharmacy Chain A5, Manzhos said.

Shares of airline UTair outperformed the market and grew 2.62% to 11.75 rubles as the government approved provision of a 9.46 billion ruble state guarantee to the company.

Below are the MICEX’ five most active stocks on Friday:

Company	Change, %	Last price, rbl	Trading volume, bln rbl
Sberbank	-4.76	98.81	10.934
Gazprom	-4.10	132.25	5.170
Surgutneftegas prefs	-2.64	42.15	3.713
Magnit	-4.95	10656.00	3.304
Lukoil	-4.12	2327.10	3.222

(70.5806 rubles – U.S. $1)

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