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Bloomberg 23.04.2014 Yuri Selyandin's commentary "Russia Stocks Retreat Third Day as Ukraine Mulls Move on East"

The Micex Index (INDEXCF) dropped for a third day as Ukraine considered resuming operations to oust militants from eastern cities and the U.S. expressed concern Russia isn’t taking steps to de-escalate the crisis.

Russia’s main equities gauge slid 0.7 percent to 1,326.91 at 11:30 a.m. in Moscow. OAO Magnit, the nation’s biggest food retailer, fell 1 percent to 7,606 rubles. OAO Gazprom, the nation’s biggest natural gas producer, declined 0.9 percent. The U.S. and its European allies have threatened to ratchet up sanctions on Russia if it doesn’t act to defuse the confrontation in eastern Ukraine.

With an April 17 accord faltering, Ukraine is inching closer to a renewed push to dislodge militants in defiance of Russia’s warnings that such a move risks sparking civil war. In a call yesterday with Russian Foreign Minister Sergei Lavrov, U.S. Secretary of State John Kerry voiced concern “over the lack of positive Russian steps to de-escalate” the crisis, according to a State Department release.

“Investors are dedicating all of their attention to Ukraine,” Yuri Selyandin, a fund manager who helps oversee about $2 billion at GHP Group in Moscow, said by phone. “We’re not seeing a positive development of the situation. The U.S. keeps reiterating that it may introduce new sanctions against Russia. I doubt that the situation will stabilize before the May 25th presidential elections” in Ukraine.

More Sanctions
Ukraine’s government is doing its part to uphold the Geneva accord and “Russia needs to comply with the commitments it made” or face more sanctions, White House spokesman Jay Carneytold reporters traveling with U.S. President Barack Obamayesterday. A decision to impose additional penalties may be made in the “coming days,” he said.

The “active phase” of Kiev’s offensive was suspended five days ago as Ukraine’s government pledged to abide by the deal negotiated in Geneva by Ukraine, the European Union, the U.S. and Russia.

Magnit yesterday posted a 9.1 percent margin on earnings before interest, taxes, depreciation and amortization in the first quarter. That’s a decline from 9.3 percent in the same quarter last year.

Equities on the Micex trade at 4.8 times estimated earnings, the cheapest valuations among 21 developing countries monitored by Bloomberg.

http://www.bloomberg.com/news/2014-04-23/russia-stocks-retreat-third-day-as-ukraine-mulls-move-on-east.html