Russian stocks sag on US Fed speech, Rosneft’s self-purchase rumors

MOSCOW, Oct 5 (PRIME) -- The Russian stock market decreased on Wednesday on statements by President of the Federal Reserve Bank of Chicago Charles Evans, anticipating an interest rate hike already in 2016 and on media reports about a possible Rosneft privatization via buyback of its own shares, analysts said.

The MICEX fell 0.46% to 1,975.85, and the RTS decreased 0.37% to 997.11.

“U.S. Federal Reserve System (Fed) representatives are demonstrating a hawkish rhetoric and rumors also tell about a possible curtailing of the European Central Bank's quantitative easing program,” Andrei Kochetkov, an analyst at Otkritie Broker, said, adding that this information is an important negative factor for the Russian market.

The diplomatic environment for Russia is getting worse as the U.S. elections loom, and the contenders are using foreign policies as a means to draw attention to their agenda, he said.

A media report on a possible Rosneft privatization as a buyback of its own shares has been extremely worrying. “The fact that Rosneft could buy back shares from at least its key owner is extremely negative for both the securities of the company and the entire market. If there are no buyers of assets of Bashneft and Rosneft, there might be no buyers of other securities as well,” Kochetkov said.

Earlier on Wednesday, Vedomosti business daily reported, citing a source with knowledge of the privatization plans that an idea of Rosneft state stake purchase by the company itself, albeit “weird”, is being discussed.

Bodgan Zvarich, an analyst at investment company Finam, said that Russian stocks were ignoring an oil price increase on Wednesday because they followed decreasing European indices. 

Bashneft’s common shares were rising during the day on speculations about a possible purchase of the company by Rosneft, while preferred shares reflected higher perceived risks, Raiffeisen Capital analyst Sofya Kirsanova said. Bashneft’s common shares closed with a 0.16% downward gap at 3,213 rubles per share. The preferred shares fell 1.70% to 1,790 rubles.

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

Company	Change, %	Last price, rbl	Trading volume, bln rbl
Sberbank	–0.1%	147.95	5.602
Gazprom	–1.05%	134.8	2.900
Rosneft	–1.41%	341.7	2 298
Lukoil	–0.03%	3,076	1 413
Norilsk Nickel	–1.13%	9,530	1.385

(62.4323 rubles – U.S. $1)