US sanctions pummel stocks, ruble as RUSAL warns of default

MOSCOW, Apr 9 (PRIME) -- Aluminum giant UC RUSAL’s announcement of a possible default in the wake of new U.S. sanctions triggered Russia’s worst market selloff in years, analysts said.

The MOEX Russia Index fell 8.34% to 2,090.88 and the RTS decreased 11.44% to 1,094.98.

“This Monday will make it into the history of the Russian stock market for a long time – the stock indices crushed to their lowest since 2014 (by the rate of fall),” said Vasily Oleinik, an expert at investment company Finam.

“The reason for the selloff was the new U.S. sanctions as well as mounting escalation of tensions in Syria, where Russia was to blame for everything again.”

Yevgeniya Abramovich, head of the currency risks research department at Swiss brokerage house Dukascopy Bank SA, said RUSAL’s statement of the impossibility to service its U.S. dollar obligations triggered sales in the ruble as well, which plunged to this year’s low.

RUSAL plummeted 20.35% to 22.55 rubles, metals giant Norilsk Nickel lost 14.56% to 9,170 rubles, steelmakers Severstal and Novolipetsk Steel (NLMK) fell 5.98% to 837 rubles and 4.73% to 143.31 rubles, respectively.

Oleinik said that Norilsk Nickel was under pressure as tycoon Oleg Deripaska, the core owner of RUSAL, also has a stake in the metals giant. Russian banks provided loans to RUSAL, and top bank Sberbank lost 17.04% to 213 rubles and Russia’s second largest bank VTB fell 9.03% to 0.0504 rubles, Oleinik said.

The ruble dived 1.9475 rubles against the U.S. dollar to 60.1225 rubles and 2.66 rubles against the euro to 74.04 rubles as of 6.12 p.m. Moscow time, according to the Moscow Exchange.

“People sold all most liquid shares, and connected it to the concerns about new possible restrictions for Russian companies. The special feature of the U.S. Countering America's Adversaries Through Sanctions Act is that they may apply sanctions to people and companies that cooperate with and finance other blacklisted companies. Russian companies are intertwined, so these concerns may be grounded,” Andrei Kochetkov, an analyst at Otkritie Broker, said.

“New sanctions may be introduced against Russia in a few coming days meaning the Foreign Ministry will have to retaliate with symmetric measures,” Oleinik said.

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

Company	Change, %	Last price, rbl	Trading volume, bln rbl
Sberbank	-17.04	213.00	56.368
Gazprom	-4.59	135.01	12.229
Norilsk Nickel	-14.56	9170.00	12.217
Lukoil	-8.10	3620.00	10.851
Rosneft	-6.29	299.50	6.739

(57.8332 rubles – U.S. $1)

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