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Bloomberg 01.08.2014 Yuri Selyandin's commentary "Russia’s Micex Retreats as VTB to Sberbank Drop on EU Sanctions"

Russian stocks declined for a second day as OAO Sberbank and OAO VTB Bank fell after the European Union imposed sanctions on the nation’s biggest lenders.

The benchmark Micex Index (INDEXCF) dropped 0.6 percent to 1,371.22 by 12 p.m. in Moscow after losing 6.6 percent in July, the weakest monthly performance since May 2012. Sberbank retreated 1.3 percent and VTB slumped 2 percent. VTB is down 21 percent this year, while Sberbank has tumbled 28 percent. The dollar-denominated RTS Index fell 0.8 percent to 1,210.17.

Sberbank and VTB are among five Russian state-owned banks that will be prohibited from selling bonds or shares in the EU, according to a statement in the bloc’s Official Journal. The EU and U.S. have been increasing the pressure on President Vladimir Putin in an attempt to get him to back down in Ukraine.

“The latest round of sanctions is negative for the image of VTB and Sberbank,” Yuri Selyandin, a money manager who helps oversee about $2 billion at GHP Group in Moscow, said by phone.

MSCI Inc. introduced indexes that exclude Russia for clients seeking to avoid exposure to the country’s stocks and is reviewing VTB’s membership in its MSCI Russia Index, the company said in a statement late yesterday.

S&P Dow Jones is seeking client consultation on Russian index members and, while it believes its indexes aren’t directly affected by sanctions, some licensees may be required to divest holdings of sanctioned companies, S&P said in a statement.

The U.S. this week imposed penalties on three Russian banks, including VTB Group, and a state-owned shipbuilder.

The Micex gauge trades at 4.9 times estimated earnings, making it the cheapest measure among 21 emerging markets tracked by Bloomberg. That compares with a multiple of 5.3 at the end of February, before Russia’s incursion in Crimea.

Fourteen stocks traded above the 50-day moving average yesterday. One closed at a new 52-week high and one closed at a new 52-week low. Of 50 stocks on the Micex, two closed with a 14-day relative strength index above 70 and three with an RSI below 30.