Bloomberg News

Sberbank ADRs Jump to November High on Europe: Russia Overnight

November 09, 2011

Nov. 9 (Bloomberg) -- Russia’s stock futures gained and OAO Sberbank’s U.S.-traded shares hit their highest level this month as Italian Prime Minister Silvio Berlusconi’s offer to resign improved prospects that Europe will resolve its debt crisis.

Futures on the dollar-denominated index expiring in December advanced 1 percent to 159,605 in New York, indicating the RTS Index may increase for a fifth day in Moscow. The Bloomberg Russia-US 14 Index of Russian companies traded in New York added 1.7 percent to 103.55. American depositary receipts of Sberbank, Russia’s largest lender, jumped 4.1 percent to $11.40, its highest price since Oct. 28.

Berlusconi’s agreement to step down bolstered commodities on expectations a new leader will be able to help keep the region’s debt crisis from spreading. Crude, Russia’s biggest export earner, rose to a three-month high in New York.

“Financials such as Sberbank have the most to lose from sovereign credit contagion, so when investors see an event they believe will contain Europe’s credit crisis, global banks rally,” Alec Young, an international equity strategist at Standard & Poor’s in New York, said by phone yesterday. “Oil is really leading, which should benefit Russia if the problems in Europe can be resolved.”

Sberbank, Gazprom

Sberbank advanced in New York after shares in Moscow gained 2.3 percent to 84.29 rubles, or the equivalent of $2.79. One ADR represents four ordinary shares. OAO Gazprom, the world’s biggest natural gas exporter, climbed 2.6 percent in New York to $12.40 as Brent, the benchmark for Russia and more than half the world’s oil, rose to its highest level since Sept. 15. Crude for December delivery climbed 1.3 percent on the New York Mercantile Exchange to settle at $96.80 a barrel, its highest since July 28.

Oil and natural gas contribute about 17 percent of Russia’s gross domestic product.

Gazprom, which is scheduled to report its financial results for the second quarter in Moscow today, slipped 0.4 percent on the Micex to 183.50 rubles, or the equivalent of $6.07. One ADR represents two ordinary shares. Gazprom’s London-listed global depositary receipts were reiterated “hold” by Renaissance Capital analysts in Moscow yesterday with a target price of $15 in the next 12 months.

“While we think that first half of 2011 results will be impressive, part of this is likely to come at the cost of a weaker second half of 2011,” Renaissance Capital analysts, led by Daniel Barcelo, the head of oil and gas research, said in a report.

Lukoil Rises

OAO Lukoil, Russia’s largest non-state oil producer, gained 1.4 percent to $60 in New York after shares fell 0.2 percent on the Micex to 1,800.20 rubles, or $59.54.

The Market Vectors Russia ETF, a U.S.-traded fund that holds Russian shares, advanced for the fifth day, adding 1.9 percent to $31.76, while the Bank of New York Mellon Russia ADR Index in New York lost 1.5 percent to 760.71.

The RTS Volatility Index, which measures expected swings in the index futures, dropped for a second day, falling 3.6 percent to 43.94 points.

Funds invested in Russian equities rose for the first time in 17 weeks in the period ending Nov. 2, gaining $55.7 million, according to EPFR Global.

“The inflows came on the heels of the short-lived burst of optimism that the Eurozone was finally getting to grips with its debt crisis, thereby reducing the threat that the crisis poses to the global economy,” Cameron Brandt, the director of research at Cambridge, Massachusetts-based EPFR, said in a telephone interview yesterday.

RTS, Micex

The RTS Index advanced 1.1 percent in Moscow yesterday to 1,579.82 while the 30-stock Micex Index was little changed at 1,520.88.

The Micex has lost 9.9 percent in 2011 and trades at 5.5 times analysts’ earnings estimates for member companies. That compares with a 15 percent decline for Brazil’s Bovespa index, which trades at 10.5 times estimated earnings, according to data compiled by Bloomberg. The Shanghai Composite Index trades at 11.8 times estimated earnings and the BSE India Sensitive Index has a ratio of 15.

Standard & Poor’s GSCI index of 24 raw materials rose 0.8 percent to 665.59 as platinum futures for January delivery gained 0.9 percent to $1,673.10 an ounce on the New York Mercantile Exchange.

Copper futures for December delivery retreated 0.1 percent to settle at $3.533 a pound on the Comex in New York while nickel lost 1.9 percent to settle at $18,350 a ton on the London Metal Exchange. Gold futures topped $1,800 an ounce for the first time in almost seven weeks before closing at $1,799.20, a gain of 0.5 percent on the day. Earlier, gold touched $1,804.40, the highest level since Sept. 21.

Brent for December settlement increased 0.4 percent to $115 a barrel on the London-based ICE Futures Europe exchange. Urals crude, Russia’s chief export blend, gained 0.2 percent to $114.88.

--Editors: Laura Zelenko, Marie-France Han

To contact the reporters on this story: Leon Lazaroff in New York at llazaroff@bloomberg.net Halia Pavliva in New York at hpavliva@bloomberg.net

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


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