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Bloomberg 10.09.2014 Yuri Selyandin's commentary "Ruble Declines With Bonds on Sanctions Concern as Crude Slides"

The ruble and Russian bonds fell for a third day as Brent crude traded below $100 a barrel and the European Union weighed deeper sanctions over Ukraine. The Micex Index of equities was little changed.
The currency lost 0.6 percent to 37.3395 per dollar by 7:12 p.m. in Moscow, the lowest level in a week. Russia’s 10-year local-currency bond yields increased eight basis points to 9.68 percent. The Micex fluctuated between a drop of as much as 0.8 percent and gain of 0.3 percent before closing at 1,468.55. OAO Sberbank, the nation’s largest lender, lost 0.9 percent, while OAO Novatek climbed for the first time in three days.
While Germany supports new penalties against Russia, the sanctions could be lifted if Vladimir Putin complies with the Ukrainian cease-fire agreement, German Chancellor Angela Merkel said today. Brent slid 1.2 percent in its fifth day of declines at 4:25 p.m. in London, after closing below $100 a barrel yesterday. Russia derives half its budget revenue from energy.
Waging Financial War
“Investors are disappointed that the talks of sanctions continue,” Yuri Selyandin, a money manager who helps oversee about $2 billion at GHP Group in Moscow, said by phone. “Declining oil is a risk to the Russian economy.”
Ukrainian President Petro Poroshenko said Russia has withdrawn more than two-thirds of its troops from his country.
Brent held below $100 a barrel for the longest period since April 2013, amid speculation that slowing economic growth will add to an excess of supply. Russia’s gross domestic product will grow 0.5 percent this year, the slowest expansion since a 2009 contraction, the Economy Ministry forecasts.
OAO Lukoil, Russia’s second-biggest oil producer, fell as much as 0.6 percent.
Expanding Sanctions
EU governments will meet today to consider extending a ban on share and bond sales to three energy producers, OAO Gazprom Neft, OAO Rosneft and OAO Transneft, and nine defense companies, according to a European official who spoke anonymously. Gazprom Neft climbed 1.3 percent, Transneft added 0.5 percent and Rosneft gained for a second day.
The Micex Index is valued at 5.2 times estimated earnings, less than half the multiple of the MSCI Emerging Markets Index. Sixty-eight percent of stocks in the Micex traded above their 50-day moving average yesterday, according to data compiled by Bloomberg.
“There’s lingering uncertainty in the market, which creates some nervousness,” Vladimir Evstifeev, an analyst at Bank Zenit in Moscow, said in an e-mailed note. “Geopolitical news is controversial, and there’s no confidence in the cease-fire agreement.”
The dollar-denominated RTS Index retreated 0.6 percent to 1,239.09, a one-week low.
Weaker Ruble
The ruble has retreated 12 percent against the dollar this year, the most among 24 developing-nation peers tracked by Bloomberg after the Argentine peso. The currency lost 0.3 percent against the euro today to 48.1900 and weakened 0.4 percent against the central bank’s basket of dollars and euros to 42.2189.
Government ruble bonds due February 2027 fell for a third day, driving the yield up 11 basis points to 9.64 percent, the highest in a week. The Finance Ministry axed its eighth bond sale in a row yesterday, citing an “unfavorable” market.
With no auctions since mid-July, a steeper decline in crude could flip the nation’s $19 billion budget surplus into a deficit by year-end, according to Bank of America Corp.
http://www.bloomberg.com/news/2014-09-10/russian-stocks-decline-as-oil-to-sanctions-dim-outlook-correct-.html