Bloomberg News

Russian Stocks Rise Most in Month as Government Buys Shares

October 29, 2008

Russian stocks climbed for a second day, led by OAO Gazprom and VTB Group, after the government said it started buying shares in companies and global equities surged.

OAO Lukoil and other oil producers advanced as crude rose the most in a month. OAO Surgutneftegaz climbed after it said third-quarter profit almost tripled.

The ruble-denominated Micex Index added 14 percent to 608.88, trimming its loss for the month to 41 percent. The dollar-based RTS Index (RTSI$) rose 12 percent to 644.

The MSCI Emerging Markets Index was headed for a second day of gains after climbing 7.7 percent overnight, its biggest advance in more than a month. The Standard & Poor's 500 Index of U.S. companies jumped 11 percent yesterday and gained 0.2 percent today as Russian markets closed.

VEB, Russia's state-owned development bank, has invested 20 billion rubles ($740 million) in shares and 5 billion rubles in bonds of Russian companies via local markets, the bank's press service said today.

``The fact that the government has started buying shares, and that there is more to come, are clearly positives,'' Troika Dialog chief strategist Kingsmill Bond wrote in a report.

Gazprom, Russia's biggest publicly traded company, added 17.5 rubles, or 19 percent, to 108.42 rubles on the Micex Stock Exchange. VTB, the state-controlled bank that went public last year, jumped 0.41 kopeks, or 12 percent, to 3.69 kopeks. Equity strategists have said that state intervention in the stock market would likely benefit state-controlled companies.

Surgutneftegaz

Lukoil, Russia's second-biggest oil producer, rose 100 rubles, or 12 percent, to 879.46 rubles, its biggest gain in more than two weeks. Crude oil rose for the first time in four days on signs that efforts to unlock global credit markets are beginning to succeed.

``Russia should perform strongly once the global liquidity squeeze eases,'' said Marina Akopian, manager of the Hexam EMEA Absolute Return Fund in London. ``Russian underperformance was not due to fundamental reasons but due to the liquidity crunch and overleveraged exposure in its equity market.''

Surgutneftegaz rose 0.82 ruble, or 6.1 percent, to 14.858 rubles, a second day of gains. Russia's fourth-biggest oil producer said third-quarter profit almost tripled to 47.5 billion rubles ($1.75 billion) under Russian accounting standards.

To contact the reporter on this story: William Mauldin in Moscow at wmauldin1@bloomberg.net.

To contact the editor responsible for this story: Daniel Hauck at dhauck1@bloomberg.net.


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