Tags: Russia | stocks | Sistema | Bashneft

Russia Stocks Drop as Court Freezes Sistema's Stake in Bashneft

Friday, 26 September 2014 05:56 AM

Russian stocks fell, trimming a weekly advance, as AFK Sistema slumped after prosecutors filed a lawsuit to return the investment company’s shares in oil producer OAO Bashneft to the state.

The Micex Index decreased 0.3 percent to 1,432.00 by 1:03 p.m. in Moscow as 34 of the gauge’s 50 members retreated. Sistema plunged 18 percent, extending its weekly slide to 23 percent, while Bashneft lost 7.3 percent. The American depositary receipts of Sistema unit OAO Mobile TeleSystems declined 1.7 percent yesterday. Competitor OAO MegaFon, Russia’s second-largest wireless operator, rose 0.5 percent today.

The Moscow arbitration court froze Sistema and Sistema-Invest’s shares in Bashneft in connection with alleged violations during Sistema’s 2009 purchase of the oil producer from the state, the prosecutor’s office said on its website. Vladimir Evtushenkov, who controls Sistema, was denied bail Thursday, leaving the billionaire under house arrest in an probe that’s hurt Russian stocks since his Sept. 16 detention.

“The prosecutors’ stance is really troubling for investors,” Anvar Gilyazitdinov, who manages $10 million in Russian stocks at Rye, Man & Gor Securities in Moscow, said by phone. “More and more investors are disappointed in this story and are pricing in a negative outcome for Sistema. MegaFon is rising as people switch cash into the stock from MTS.”

Court Ruling

The ruble slid 0.9 percent to 38.8510 per dollar, after falling to a record 38.9790 earlier, while the dollar-denominated RTS Index lost 1.2 percent.

Evtushenkov, who is accused of money laundering, will be detained at home and won’t be allowed to make telephone calls, a court in the Russian capital ruled yesterday. Moscow-based Sistema had planned to hold a share offering for Bashneft in London or Moscow this year to raise at least $1 billion, Bashneft Chief Executive Officer Alexander Korsik said in an interview on June 5.

The Micex, which has fallen 3.1 percent since Evtushenkov’s arrest, erased a gain of as much as 0.9 percent yesterday as a lawmaker from the ruling United Russia party submitted a draft bill to allow the state to seize assets of foreign governments within Russia, according to the State Duma database. The draft seeks to compensate citizens who are victims of “unlawful” judgments abroad.

Sixty-eight percent of Micex stocks traded above their 50-day moving average Thursday, data compiled by Bloomberg show. The gauge is valued at five times estimated earnings, compared with a multiple of 10.8 for the MSCI Emerging Markets Index.

Russian U.S.-traded exchange traded funds received $50.4 million of inflows yesterday, the most after Brazil, with $50.36 million going into Market Vectors Russia ETF, according to data compiled by Bloomberg.

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Russian stocks fell, trimming a weekly advance, as Sistema slumped after prosecutors filed a lawsuit to return the investment company's shares in oil producer Bashneft to the state.
Russia, stocks, Sistema, Bashneft
Friday, 26 September 2014 05:56 AM
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