(Corrects Chris Weafer's title in the 10th paragraph) * MICEX, RTS down in global worries * Megafon shares down on debut trading * Rouble weakens on oil By Maya Dyakina MOSCOW, Nov 28 Shares in Russia's number two phone operator MegaFon fell on their first day of trading on Wednesday after an initial public offering was priced at the bottom of its guided range, adding to a sour mood on Moscow stock markets. The rouble, which had firmed by nearly 2 percent during over two weeks of local tax payments, weakened along with international prices for Russia's main export, oil. The poorly received MegaFon launch added to concern over a fiscal deadlock in the U.S. and the oil price slide, pushing Moscow's rouble-denominated MICEX share index and the dollar RTS index down by 0.7 percent and more than one percent respectively by 1312 GMT. MegaFon priced its offering at $20 per GDR, raising $1.7 billion. The shares declined on the first day of trading in London and in Moscow, reflecting investor caution given the poor subsequent performance of some previous Russian IPOs. "People got full allocations and hedge funds made up a significant portion of the book - that's a bad sign because they flip," said one equity salesman in Moscow, referring to the strategy of short-term speculation. Another market source confirmed that hedge funds were selling at this stage. State-controlled telecoms operator Rostelecom was the biggest loser of the day, its shares falling by 5 percent. The company's CEO and a minority shareholder have recently been investigated in a fraud probe. Shares in MTS - MegaFon's main rival - fell 0.8 percent. Still, Angelika Genkel, a senior analyst at Alfa Bank, said MegaFon depositary receipts could get a considerable boost in demand from index-linked institutional investors if the stocks are included in the MSCI Russia index in the index revision scheduled for Nov. 30. Chris Weafer, chief strategist at Sberbank Investment Research, said that investors have been deterred by uncertainly over Europe's debt, Chinese growth fears, and the ongoing budget negotiations in the United States. Trading volumes on the Moscow stock exchange have remained subdued in recent months, with investors focusing on individual companies with strong dividends. The rouble weakened on Wednesday, reacting to a decline in oil prices , losing 0.4 percent against the dollar at 31.2. The rouble was flat against the euro at 40.17, and was 0.2 percent down at 35.21 against the euro-dollar basket. The rouble has firmed by nearly 2 percent during a two-week long tax payment period, which prompted export-oriented companies to convert revenues to meet local liabilities. Now, with the tax payment period over, banks are betting on a downward trend in anticipation of a seasonal boost in budget spending. "The rouble tends to be weaker in December and the first quarter than the rest of the year," analysts at Bank of America Merrill Lynch wrote in a note. "In our view the primary reason is the pattern of liquidity injection through the budget, which tends to pick up in December, and takes the first months of the year to be mopped up." However, the impact of this seasonality should be lower than previously, as budget spending was more balanced throughout the year. Russian Markets Latest Net % Change % Change Change on year STOCKS MICEX 1384.81 -10.06 -0.72 -1.24 RTS 1401.47 -16.13 -1.14 1.42 London ADRs 805.45 -4.88 -0.60 3.47 Emrg Mkt Indx 989.01 -7.43 -0.75 7.92 MSCI Russia 743.69 -6.04 -0.81 0.94 Sberbank 87.84 -1.36 -1.52 11.39 VTB 0.05 -0.00 -0.85 -12.51 Gazprom 138.05 -0.25 -0.18 -19.41 LUKOIL 1901.80 -10.70 -0.56 11.71 Rostelecom 111.21 -4.88 -4.20 -26.84 Dollar/Rouble 31.15 0.12 0.39 -3.10 Euro/Rouble 40.17 0.01 0.03 -3.76 Rouble basket 35.21 0.07 0.21 -3.44 DEBT Bid Ask %Rtn Coupon Russia 10-yr bond 7.08 7.05 -0.13 7.60 MONEY MARKET Bid Ask Close Overnight rate 6.49 7.00 6.38 TABLE FROM POWER PLUS PRO All data taken from Reuters at 1312 GMT (Writing by Maya Dyakina, additional reporting by Douglas Busvine and Sonia Elks; Editing by Ruth Pitchford)
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