Bloomberg News

RTS Futures Rise as Norilsk May Buy Back Stock: Russia Overnight

September 13, 2011

Sept. 13 (Bloomberg) -- Russia’s RTS futures rose, indicating the measure may rebound from a one-month low, as the board of metals producer OAO GMK Norilsk Nickel said it may buy back shares at a $57 premium, offsetting concern that Greece will default and deepen the global economic slowdown.

Futures on the dollar-denominated index expiring in September rose 1.1 percent to 158,590 yesterday. The RTS Index in Moscow lost 3.6 percent, its biggest decline in three weeks, to 1,566.64, the lowest level since Aug. 11. The 30-stock Micex Index lost 1.7 percent to 1,493.19, a one-week low. The Bloomberg Russia-US 14 Index of Russian companies traded in New York fell for a third day, sliding 0.1 percent to 280.1246. The Micex may climb 1 percent at the start of trading, according to Alfa Bank.

Norilsk, the world’s largest nickel producer, may offer $306 a share to buy as much as $4.5 billion of stock back on the market, the Moscow-based company said in a statement on its website on Sept. 8. Concern Greece may be on the verge of not being able to fulfill debt repayments was also muted by speculation China is in talks to invest in Italy, the euro region’s third-largest economy.

“Norilsk’s buyback helped to offset the decline as their buyback is being closely watched by investors,” Yan Gloukhovski, a trader at Alforma Capital Markets, the New York branch of Alfa Bank, Russia’s biggest private lender, said in a phone interview. “The focus, though, is on Europe, so anything that alleviates the European debt situation becomes the main driver for the market.”

Gazprom, CTC Media

Italian officials have held talks with Chinese counterparts about potential investments, an Italian government official said on condition of anonymity. A spokesman for Italian Finance Minister Giulio Tremonti declined to comment. Euro-area countries must avoid an “uncontrolled insolvency” in Greece because it is likely that this would affect all other countries, German Chancellor Angela Merkel said in an interview with rbb- Inforadio today.

American depositary receipts of Norilsk surged 4.6 percent to $25.30, the highest level since Aug. 3. On the Micex, the stock gained 2.1 percent to 7,542 rubles, the equivalent of $248.60. Norilsk’s board will consider the buyback at a Sept. 13 meeting, the statement last week said. They may offer $30.60 per depositary receipt.

OAO Gazprom, the world’s biggest natural gas exporter, pared an earlier decline of as much as 2.5 percent to close down 0.5 percent at $11.01. Crude oil for October delivery advanced 1.1 percent to settle at $88.19 a barrel on the New York Mercantile Exchange. Urals crude, Russia’s chief export oil blend, was little changed at $114.23 after earlier dropping as much as 1.7 percent.

Volatility Falls

CTC Media Inc., the U.S.-listed Russian television network, plunged the most in almost two years after the Moscow-based company cut its forecast for revenue growth to 15 percent from 20 percent because of lower-than-anticipated audience share. CTC plunged 14 percent to $11.70, a two-year low.

A reduction in advertising spending by Russian consumer companies because of the country’s slowing economy was behind the forecast revision, Gloukhovski said.

The Market Vectors Russia ETF, a U.S.-traded fund that holds Russian shares, gained 0.7 percent to $31.28, while the Bank of New York Mellon Russia ADR Index dropped for a third trading day, losing 0.3 percent.

The RTS Volatility Index, which measures expected swings in the index futures fell, dropping 3.4 percent to 50.68 points. One index point equals $20.

The Micex has slumped 12 percent this year and trades at 5.6 times analysts’ earnings estimates. That compares with a 20 percent slide for Brazil’s Bovespa Index, which trades at 9.5 times estimated earnings, according to data compiled by Bloomberg. The Shanghai Composite Index trades at 11.4 times estimated earnings, and India’s BSE India Sensitive Index has a ratio of 14.

The euro traded at $1.3678 as of 1:10 a.m. Hong Kong time, from $1.3679 yesterday, when it touched $1.3495, the weakest since Feb. 16. Russia’s ruble weakened 0.7 percent to 30.2750 per dollar in Moscow, the weakest level since January, data compiled by Bloomberg show.

--Editors: Emma O’Brien, Glenn J. Kalinoski

To contact the reporter on this story: Leon Lazaroff in New York at llazaroff@bloomberg.net

To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net


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