Micex Becomes First Bear Market Since March Rally
By Michael Patterson and Laura Cochrane
Bloomberg
MOSCOW — Russia’s Micex Index tumbled more than 20 percent from its 2009 peak, becoming the world’s first benchmark equity index to enter a bear market since global stocks began rallying in March. The index of ruble-denominated shares slid 7.8 percent to 937.98 on Monday in Moscow, bringing its decline since June 1 to 22 percent. The 30-company gauge led a worldwide retreat in stocks this month on concern the global recession will persist for longer than investors anticipated. “The market needs to pause because it has been going up too much,” said Nicholas Field, who helps manage about $11 billion in emerging-market stocks at Schroders Plc in London, including Russian equities. “Nothing goes in a straight line.” The MSCI All-Country World Index slid 5.8 percent from its 2009 high, paring its gain from a six-year low on March 9 to 39 percent. The Micex, which rallied as much as 135 percent since October, is tumbling this month after reaching the most expensive level relative to profit estimates since January 2007, according to data compiled by Bloomberg. Russia’s economy may shrink 7.5 percent this year as industrial production collapses, unemployment rises and investors pull capital from the world’s largest energy exporter, the World Bank said Monday. That compares with the Washington-based lender’s forecast for a 2.9 percent contraction in the global economy. “Some of Russia’s main industrial production data was disappointing and is a reminder that the real economy is going to be impacted quite severely this year,” said Michael Wang, an emerging markets strategist at Morgan Stanley in London. “There is not going to be a quick V-shaped recovery in Russia.” After Russia, Croatian stocks are the closest to a bear-market decline since the global equity rally began. The Balkan nation’s Crobex index is down 15 percent from its 2009 high. A bear market is defined as a decline of 20 percent or more. Brazil’s Bovespa Index has dropped 8.5 percent from its peak this year, while India’s Bombay Stock Exchange Composite Index slid 7.4 percent. The Shanghai Composite Index closed Monday at its highest level since July 28. The Micex’s rally from its four-year low on Oct. 24 to its peak this month was the steepest among stock benchmarks in the world’s 70 biggest markets. Investors poured money into the Russian market as oil more than doubled and the nation’s currency, the ruble, recovered from a 19 percent slide against the dollar last year. Oil has dropped 8.6 percent from its high this year, while the ruble has weakened 2.3 percent against the dollar since June 1.
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