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Russian indices in moderate fall on EU sanctions

August 01, 2014, 11:30 UTC+3 MOSCOW

The risk of Russian stocks exclusion from some stock indices have increased, experts say

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© ITAR-TASS/Mikhail Japaridze

MOSCOW, August 01. /ITAR-TASS/. Russian stock indices opened Friday with a moderate descent on the specified EU sanctions. The MICEX Index opened 0.3% down at 1,375.47 points; the RTS Index dropped 0.53% to 1,212.94 points as of 10:15am Moscow times.

Russian indices are under pressure of Thursday’s announcement of new companies on EU black sanction list, including Sberbank, VTB, Gazprombank, VEB and Russian Agricultural Bank. European residents are now prohibited from providing the sanctioned companies with medium-and long-term lending, while market players hoped the restrictions would not affect at least Sberbank.

Sectoral anti-Russian sanctions the West adopted in the first stage of third phase, including restrictions of capital migration, have increased the risk of Russian stocks exclusion from some stock indices, said chief analyst at Promsvyazbank research division Oleg Shagov.

“One of index providers S&P Dow Jones Indices has already started consultations with customers on the feasibility of Russian corporate stocks standing in the indices,” he said. “Many Western funds can only invest in stocks within stock indices. Therefore, expulsion of Russian stocks from Western stock indices might cause sell-offs.”

The negative backdrop and strong bear sentiment abroad for fear of Argentina’s default and amid weak corporate reports give no reasons for optimism either.

“US indices dropped by an average of 2%, futures are traded above Thursday closing levels. European indices slipped, while Asians are traded mixed,” said IF Olma analyst Ruslan Yunusov.

SOLLERS stocks opened best (1.16%) and Mechel preferreds (0.67%). Sberbank common and preferred stocks underperform (0.84 and 1.18% respectively) as well as VTB (1.18%).

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