Stocks to fall as Gazprom votes dividends down, bad environment

MOSCOW, Jul 1 (PRIME) -- The Russian stocks are likely to start the Friday trade lower as the market is still reverberating from the gas giant Gazprom’s dividend cancellation, while the unfavorable external background only adds fuel to the fire, analysts said.

“The news background for the Russian market is bad on Friday. On Thursday, the U.S. stock market summarized the results of the bad quarter and six months, with the S&P 500 index showing the worst January–June dynamics over the past 50 years. The Russian market suffered a tremendous blow from the news about cancellation of Gazprom’s dividends, and it would be impossible to overlook such a negative impact today,” Zarina Saidova, analyst at investment company Finam, said.

The Asian floors are in the red zone, the Brent oil price futures lost 0.7%, and the futures for the S&P 500 index fell by 1.1%, she said.

“(Gazprom’s) decision was made despite the absence of signals from the management or the controlling shareholder after only six weeks after a recommendation of record high dividends of 52.5 rubles per share was made … It looks like the government’s plans to raise the mineral extraction tax by almost 1.3 trillion rubles threaten the company’s investment program if the dividends are paid. The decision could also be caused by lower exports to Europe and gas sanction risks,” Georgy Vashchenko, Freedom Finance’s department head, said.

The Thursday contraction is likely to continue on Friday morning, but the MOEX Russia Index should lose no more than 1.5%, Vashchenko said.

But Bogdan Zvarich, senior analyst at financial platform Banki.ru, said that the Russian market may start the day with a slight upward correction and the MOEX Russia Index will grow to 2,250.

Later in the day, investors will focus on macroeconomic statistics, including data on business activity in the industries of Europe and the U.S. and preliminary inflation data for the Eurozone, he said.

(52.5123 rubles – U.S. $1)

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