Bloomberg News

NYSE Vying to Boost Listings as Futures Fall: Russia Overnight

October 31, 2011

Oct. 31 (Bloomberg) -- The New York Stock Exchange is seeking to lure more listings from Russia, which has the fewest companies among the biggest emerging nations trading on the world’s largest equity market.

Top executives from United Co. Rusal, the world’s largest aluminum producer, and OAO Uralkali, the biggest potash producer, attended an NYSE-hosted conference in New York on Oct. 28, aimed at attracting more Russian businesses to list on the exchange. The bourse is attempting to lure more Russian companies, said Diederik Zandstra, the head of international listings.

“Russia is one of our five target priority markets and we’ve been on the ground regularly to cover Russian companies so that we as a global exchange provider can be seen by Russian companies as a business partner,” Zandstra said in an interview in New York on Oct. 28. “Russian companies are looking at alternative exchanges where they can successfully IPO. That’s why the U.S. market is coming back into focus with all the Russian issuers.”

The Bloomberg Russia-US 14 Index of Russian companies traded in New York slid 0.8 percent to 104.93 on Oct. 28, led by OAO Gazprom and OAO GMK Norilsk Nickel as prices for metals and crude oil declined. Futures expiring in December on Moscow’s dollar-denominated RTS Index added 0.1 percent to 160,865, after the RTS and the 30-stock Micex index rose to their highest levels since the week ended Sept. 9. The Micex may slide 0.5% at the open today, according to Alfa Bank.

Mechel, VimpelCom

OAO Mechel, VimpelCom Ltd. and OAO Mobile TeleSystems are the only Russian companies listed on the NYSE.

American depositary receipts of Mechel, Russia’s largest coal producer for steelmakers, increased 4 percent to $14.40 on Oct. 28 as the price of coal climbed to a two-week high of $73.65 a ton in New York. Mechel’s shares gained 3.4 percent on the Micex to 415.70 rubles, the equivalent of $13.95.

VimpelCom, Russia’s third-biggest mobile carrier, dropped 2 percent to $11.50 in New York, the biggest one-day drop since Oct. 17. ADRs of Mobile TeleSystems rose 0.1 percent to $15.01, the highest price since Sept. 8, while stock in Moscow fell 0.6 percent to 193.94 rubles, or $6.50. One ADR equals two ordinary shares.

The NYSE lists 102 Chinese firms, 28 from Brazil and 11 from India, according to its website.

Mechel and the gold unit of OAO Severstal, the second- largest steelmaker, are among Russian companies that delayed IPOs this year. Russian stock trading in London has outpaced volumes in Moscow for 13 straight months to the end of September, with the gap reaching a three-year high of 50 percent in August, according to data compiled by Bloomberg.

‘Demand For Russian Companies’

The ten most actively traded stocks on the London Stock Exchange’s international order book are from Russia, Anthony Moro, a managing director and head of emerging-market depositary receipts at the Bank of New York Mellon Corp., said in an interview in New York in Oct. 28.

“There is certainly demand for Russian companies,” Moro said. “When the markets turn around, next year I think we’ll have two more Russian companies listing at a minimum, four at a maximum.”

Oil, Russia’s biggest export earner, retreated from a three-month high as a drop in Japan’s industrial output prompted traders to lock in profits from the previous rally. Crude for December delivery slid 0.7 percent to settle at $93.32 a barrel on the New York Stock Exchange. Urals crude, Russia’s chief export oil blend, slumped 1.9 percent to $109.53 a barrel, down 0.3 percent in the second straight weekly decline.

Nickel Drops

Gazprom’s biggest market for natural gas is the European Union, where leaders agreed on Oct. 27 to bolster the region’s bailout fund for debt-stricken members to 1 trillion euros ($1.4 trillion) and persuaded bondholders to take 50 percent losses on Greek bonds.

ADRs of the world’s biggest gas exporter fell 1.4 percent to $12.42, paring a weekly gain of 16 percent, the biggest since July 2009. The stock fell 0.3 percent in Moscow to 185.02 rubles, or the equivalent of $6.20. One ADR represents two ordinary Gazprom shares.

Nickel for three-month delivery dropped 1 percent to $19,700 a ton at the end of last week on the London Metal Exchange.

Norilsk, Russia’s biggest mining company and the world’s largest nickel producer, fell 2.1 percent to $20.53 on Oct. 28 in New York after the Moscow-based company completed a $4.5 billion share buyback program. Norilsk ended the purchase of as much as 7.7 percent of its stock. The results will be announced this week, Erzhena Ischenko, a company spokeswoman, said by phone on Oct. 28. Micex-listed stock of Norilsk fell 1.8 percent to 6,133 rubles, or $203.86. One ADR represents one-tenth of an ordinary share.

Sberbank Stake

The Market Vectors Russia ETF, a U.S.-traded fund that holds Russian shares, dropped 1.3 percent to $32.04, and the Bank of New York Mellon Russia ADR Index slipped 0.1 percent.

OAO Sberbank, the nation’s biggest lender, declined 1.3 percent to $11.56 in U.S. trading after German Gref, the chief executive officer, said the company may start preparing for the central bank to sell a 7.6 percent stake in the lender when Sberbank’s share price approaches 100 rubles. Sberbank stock on the Micex added 0.1 percent to 85.41 rubles, or $2.87.

Russia’s central bank left key borrowing costs unchanged on Oct. 28, after cutting lending rates for the first time in 15 months in September.

--Editors: Emma O’Brien, Marie-France Han

To contact the reporters on this story: Ksenia Galouchko in New York at kgalouchko1@bloomberg.net; Belinda Cao in New York at lcao4@bloomberg.net

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


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