Raging trade wars, falling oil prices undermine Russian stocks

MOSCOW, Jun 18 (PRIME) -- Russian stocks contracted on Monday as investors have been withdrawing money from emerging markets lately because of the U.S. trade wars with the rest of the world, while falling oil prices resulted in a slump of the ruble and of the U.S. dollar-denominated RTS index, analysts said.

The MOEX Russia Index fell 0.67% to 2,222.56 and the RTS decreased 1.47% to 1,100.63.

“The trade conflict between the U.S. and the world is gaining momentum. Following the increase of duties on industrial metals for the E.U., the U.S. president announced introduction of 25% duties on Chinese goods worth U.S. $50 billion last Friday. As well as the E.U., Beijing is preparing mirror measures for U.S. goods…This is not good for the stock markets, so the outflow of capital from all markets has increased, and we should brace for a slump of business activity in the world from July,” Vasily Oleinik, an analyst at investment company Finam, said.

In slightly more than a month, the Asian markets lost almost $19 billion. Russia-dedicated funds have registered an almost $1 billion outflow over the past month and a half, Oleinik said.

“The global stock market started the new trading week with contraction of major indices. The stock indicators were undermined not just by concerns about a future trade conflict between the U.S. and China, but also by the falling oil prices,” which resulted in a decrease of the ruble and of the RTS index, Yevgenia Abramovich, head of the currency risks research department at Swiss brokerage house Dukascopy Bank S.A., said.

The Brent oil price fell to its multi-month low of $72.5 per barrel and slightly rebounded, according to the ICE exchange. “In addition to that, we don’t rule out the possibility of oil prices falling to $70 per barrel on worries about increased oil production by OPEC and non-OPEC states,” Abramovich said.

Andrei Kochetkov, an analyst at Otkritie Broker, said that players of the local stock market focused their attention on foreign news due to the lack of significant domestic events, while another key negative factor for the market was the E.U.’s prolongation of its sanctions against Russia over Crimea for one more year.

Shares of steelmaker Severstal lost 7.20% due to ex-dividend trade, while telecom giant Rostelecom gained 1.66% due to new dividend policy, Kochetkov said.

The Federal Customs Service proposed a duty on all online purchases abroad, which is unfavorable for people, but good for domestic retailers that may experience an inflow of clients, like electronic goods and household appliances retailer M.Video, which shares grew 0.47%, Kochetkov added.

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

Company	Change, %	Last price, rbl	Trading volume, bln rbl
Sberbank	-1.46	206.30	11.281
Gazprom	-0.88	136.52	3.165
Lukoil	-0.23	4045.50	2.337
VTB	+3.59	0.04611	1.759
Rosneft	+0.98	387.00	1.562

(62.6851 rubles – U.S. $1)

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