Russian stocks slide on second day of trade, led lower by Aeroflot

(Reuters) – Russian stocks fell on Friday in their second day of trading after a near month-long suspension, with losses led by flag carrier Aeroflot, which has lost more than a quarter of its value over two days to plunge to its lowest since 2009.

Commodity stocks led a resurgent market on Thursday, many making double-digit gains, but securities slid lower across the board on Friday. The benchmark MOEX stock index closed 3.7% lower at 2,484.13 points. It had closed 4.4% higher on Thursday.

The dollar-denominated RTS index fell 2.7% to 829.6 points.

Prior to Thursday, stocks had not traded on Moscow’s bourse since Feb. 25, the day after Russian President Vladimir Putin sent thousands of troops into neighbouring Ukraine.

The move prompted Western sanctions aimed at isolating Russia economically, and Russian countermeasures.

On Friday more securities, including corporate bonds and Eurobonds, were being traded in another short session, and restrictions on trading by foreigners alongside a ban on short selling remained.

Airline Aeroflot dropped 18.2% to its weakest point since early 2009, adding to Thursday’s 16% loss. State lenders Sberbank and VTB also fell 3.5% and 7.9% respectively.

Oil major Rosneft and mining giant Nornickel were exceptions, gaining 1.4% and 0.4%.

ROUBLE GAINS

The response to events in Ukraine has ripped Russian financial markets from global networks and sent the rouble tumbling, although it was on course for five consecutive sessions of growth, heading for a weekly gain of around 10%.

On Friday the currency gained 3.6% against the dollar in Moscow trade to 93.6 as of 1134 GMT, its strongest since March 1.

The currency received a boost on Wednesday after Putin said Russia would start selling its gas to “unfriendly” countries in roubles.

Fewer imports to Russia, the exodus of western companies and Putin’s switch to roubles for gas exports are all positive for the Russian currency, Commerzbank analysts said in a note.

“A return to the old pre-war (rouble) strength is nonetheless unlikely,” they said, pointing to the effect that lower demand and shrinking exports will have.

In offshore markets, the rouble was trading at about 98 to the dollar, weaker than in Moscow, where cash purchases of foreign currency are restricted.

The rouble had gained 6% to trade at 100.4 versus the euro in Moscow, earlier passing the 100 threshold for the first time since Feb. 28.

RUSSIAN RESPONSE

The central bank on Friday said restrictions imposed on capital flows were a tit-for-tat move after its reserves were frozen by Western countries.

“In response to the freezing of part of Russia’s reserves, Russia also introduced restrictions on the movement of funds that could be transferred to unfriendly countries by a comparable amount,” the central bank said.

Moscow is now looking to friendlier markets. Andrei Kostin, chief executive of VTB, whose activities have been hit by sanctions, said opportunities would arise elsewhere and that his lender was offering accounts to Russians in Chinese yuan.

“We have already deposited the equivalent of 16 billion roubles in yuan, citizens are already depositing, and there are other currencies of neighbouring states,” he told RBC TV.

Dominant lender Sberbank said late on Thursday it expects trade turnover and settlements of the rouble-yuan pair on Moscow Exchange to increase.

(Reporting by Reuters; Editing by Jason Neely, Robert Birsel and Jan Harvey)