Ukraine’s protests, gas sabotage drag Russian stocks down

MOSCOW, Apr 9 (PRIME) -- The Russian stock market shrank on Wednesday as continuing protests in Eastern Ukraine, the beginning of another gas war between Gazprom and Kiev and marginal U.S. market dynamics before a Federal Reserve System (Fed) meeting did not leave it chances to grow, analysts said.

The MICEX fell 0.26% to 1,348.85, and the RTS slid 0.47% to 1,190.13

“The U.S. stock markets grew at the opening of the trading session but then they started to fall, which was partially due to a usual investor cautiousness before a Fed meeting, this was in fact the main reason why the Russian stock market could not grow. The political events in the Eastern Ukraine, of course, took their toll as well,” Dmitry Mikhailov, a portfolio manager at Alfa-Capital, said.

Mass marches of protest against a new Ukrainian government took place in the cities of Kharkov, Donetsk and Lugansk.

Ukrainian news agency UNIAN reported that the country has stopped purchasing Russian gas for its underground storages because the government disagrees with the gas price hike after Gazprom cancelled all discounts. This step can undermine transit to the E.U. when the winter season comes and Ukrainian consumers need gas.

“Russian shares saw significant sell-offs after Ukraine stopped pumping Russian gas into underground storages. This way a gas war has begun today. This is much better than a scenario involving a real military face-off in the Eastern Ukraine. Nevertheless, the end of the gas transit harms both Gazprom’s exports and the entire Russian economy,” Zerich Capital Management senior analyst Oleg Dushin said.

Dushin said that traders have long expected a gas conflict between the two countries to escalate; this is why the Russian floors did not fall sharply.

The response by the President Vladimir Putin who said that Russia should not discontinue gas supplies to Ukraine despite the new government’s storage sabotage and threats to leave the debts for supplies in March unpaid did not bring comfort to investors, Mikhailov said.

The metals and mining sector felt confident as international prices grew, he said.

Retailer Dixy soared 13.33% to 310.50 rubles as a solid 2013 financial performance report encouraged investors, analysts said.

Sberbank was one of the biggest losers. According to Mikhailov, investors fear that the capital outflow from Russia-dedicated funds will seriously undermine the biggest lender’s business.

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

Company	Change, %	Last price, rbl	Trading volume, bln rbl
Sberbank	-0.71	78.85	12.673
Gazprom	-0.71	132.31	8.527
Norilsk Nickel	-0.50	6209	2.796
Lukoil	-1.05	1900	2.634
Magnit	-3.29	7980	2.063

(35.5475 rubles – U.S. $1)

End