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OAO GMK Norilsk Nickel (NILSY), the best performer earlier this year among Russian shares traded in the U.S., sank to a six-month low on concern demand will weaken amid expectations for a slowdown in global economic growth.
American depositary receipts of the world’s largest nickel producer dropped 1.6 percent to $17.23 yesterday as the metal, used to prevent corrosion in stainless steel, slumped the most in two weeks. The stock has lost 20 percent since July, reversing a five-month rally that made it stand out as the benchmark Micex Index tumbled after President Vladimir Putin’s annexation of Crimea in March.
Nickel entered a bear market last month amid a slowdown in China, the largest metals consumer, and as stockpiles ballooned to a record. The International Monetary Fund on Oct. 7 cut its forecast for global growth, sparking concern that demand will ebb. Norilsk skirted the selloff in Russian equities triggered by sanctions over the nation’s role in the Ukraine war, surging 46 percent to an almost three-year high in July after months of nickel shortages.
“The company, which wasn’t affected by the sanctions, is now reacting to investors’ concern over economic growth, particularly in China, because that signals less demand for the metal,” Sergey Donskoy, an analyst at Societe Generale SA in Moscow, said by phone yesterday. “The outlook for nickel prices doesn’t look as promising as it did just recently.”
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