Halia Pavliva

Russian stocks traded in New York plunged this week, pushing a benchmark index to the longest run of declines since at least 2005, as crude oil tumbled below $100 for the first time since February.

OAO Mechel (MTL), Russia’s largest coking coal producer, dropped 15 percent this week to the lowest level since July 2009 yesterday, leading a slump in the Bloomberg Russia-US Equity Index. (RUS14BN) The gauge of the most-traded Russian companies in New York lost 5.8 percent to a three-month low. American depositary receipts of OAO Gazprom (OGZPY), the world’s biggest producer of natural gas, traded at the biggest discount to the shares in Moscow among the New York-listed Russian companies.

Oil, the biggest source of export revenue for Russia, fell to as low as $97.51 in New York yesterday as economic data this week from slowing Chinese service-sector expansion to worse- than-estimated U.S. jobs growth reignited concern over a global recession. Russia, the world’s biggest energy exporter and the largest producer of nickel and palladium, got almost 50 percent of budget revenue from oil and gas sales last year.

“Given Russia’s high dependence on the price of oil, this decline is magnified,” Ilya Kravets, an analyst at ED Capital LLC, which manages $100 million including Russian equities, said by e-mail in New York yesterday. “People are worried that the global economy may be slowing. This is making them cautious on everything and especially markets like Russia.”

The Bloomberg Russia-US Equity Index fell to 96.79 yesterday, dropping for a ninth consecutive week, the longest losing streak since Bloomberg began tracking data. Russian markets remain open today and during public holidays on May 7 and May 8. The markets were shut for holidays on April 30 and May 1.

‘Poor Jobs Number’

Crude for June delivery fell to $98.49 a barrel on the New York Mercantile Exchange, the lowest since Feb. 7. Brent oil for June settlement dropped 2.5 percent to $113.18 on the London- based ICE Futures Europe exchange. Urals crude, Russia’s chief export blend, declined 2.7 percent to $110.99.

U.S. Payrolls climbed 115,000 in April, the smallest increase in six months, Labor Department figures showed yesterday in Washington. The median estimate of 85 economists surveyed by Bloomberg News called for a 160,000 advance.

“Today’s market sell-off was due to a fall in oil prices and the poor jobs number in the U.S.,” Arjun Jayaraman, who manages $400 million in emerging-market equities at Causeway Capital Management LLC in Los Angeles, said by e-mail yesterday.

A purchasing managers’ index for China was at 56.1 in April, the National Bureau of Statistics and China Federation of Logistics and Purchasing said in a statement. That compares with 58 for March.

Mechel, RusHydro

The Market Vectors Russia ETF (RSX), a U.S.-traded fund that holds Russian shares, retreated 3.9 percent to $27.66 yesterday, the lowest since Jan. 9. The RTS Volatility Index, which measures expected swings in the index futures, lost 2.2 percent to 29.27 points.

Mechel (MTLR) posted its biggest weekly decline since Nov. 18. The stock fell 4 percent to $7.44 in New York yesterday, the lowest close since July 13, 2009. The Russian stock dropped 15 percent in Moscow this week to 221 rubles, or the equivalent of $7.42.

RusHydro (RSHYY) was the second-biggest decliner on the Bloomberg Russia-US Index this week, falling 11 percent to $3.12.

The 30-stock Micex Index (INDEXCF) declined 3.6 percent to 1,391.14 in Moscow, the lowest since Dec. 29. The dollar-denominated RTS (RTSI$) index fell 4 percent to 1,498.05.

Futures expiring in June on Russia’s RTS Index rose 0.5 percent to 144,675 in U.S. trading yesterday.

‘Uninvestable’ Industries

ADRs of Gazprom, the world’s biggest producer of natural gas, fell 4.6 percent to $10.79, the lowest level since Dec. 30. The shares in Moscow dropped 3.8 percent to 162.66 rubles, or the equivalent of $5.46. One ADR equals to two shares.

Russia’s government said on May 2 it has approved a plan to at least double the natural gas extraction tax as it seeks funding for higher pensions and salaries pledged by president- elect Vladimir Putin during his campaign.

“Industries such as oil, gas and power are now uninvestable in Russia, after the government has signaled that it plans to use natural resources industries for funding the president’s election campaign promises,” Hawk Sunshine, who manages $300 million in assets at IFC Metropol, said by phone from Moscow yesterday.

Polyus Gold International Ltd. (PLZLY), Russia’s biggest gold producer, fell 1.4 percent to $2.91. The company will hold an annual general meeting in London on May 28, according to a statement on its web site yesterday. The company plans to pay at least 20 percent of its net income in dividends on an annual basis, according to the statement.

http://www.bloomberg.com/news/2012-05-04/mechel-leads-worst-adr-slump-since-2005-on-oil-russia-overnight.html