Bloomberg News

Russian Stocks Rebound as China Cuts Reserves, Crude Tops $100

November 30, 2011

Nov. 30 (Bloomberg) -- Russian stocks climbed for the second day this week after China cut banks’ reserve requirements and crude gained, lifting the outlook for producers in the world’s biggest energy exporter.

The Micex Index surged 1.4 percent to 1,475.06 by 3:25 p.m. in Moscow, paring an earlier loss of as much as 0.5 percent. OAO Transneft, the national pipeline operator, and OAO Sberbank, the country’s biggest lender, led the gauge higher. The dollar- denominated RTS Index rose 1.5 percent to 1,488.54 today.

Stocks and futures rebounded globally after China cut the amount of cash that banks must set aside as reserves for the first time since 2008 to safeguard growth. Crude, Russia’s main export earner, jumped as much as 0.6 percent to $100.35 a barrel in New York. Stocks fell earlier as investors bet Standard & Poor’s downgrade yesterday of some of the world’s biggest lenders may exacerbate Europe’s debt crisis.

The effect of the reserve cut is “risk-on,” Julian Rimmer, a trader of Russian shares at CF Global Trading in London, wrote today in e-mailed comments. Oil is “most sensitive to this kind of newsflow, with Russia not far in its wake,” he said.

All but six of the Micex’s 30 component stocks gained. Sberbank rose 2.5 percent to 84.63 rubles after posting a better-than-expected profit jump in the third quarter as it increased lending and released reserves set aside to cover bad loans.

Net income rose to 79.8 billion rubles ($2.54 billion) from 45.8 billion rubles a year earlier, according to a statement on the Moscow-based lender’s website today. That beat the average estimate of 75 billion rubles from nine analysts surveyed by Bloomberg News.

Cheapest BRIC

Euro-area finance ministers approved enhancements yesterday to the European Financial Stability Facility, while backing off setting a target for its firepower and seeking a greater role for the International Monetary Fund in fighting the debt crisis.

The Micex has lost 12 percent this year as Europe’s debt crisis spread. The measure trades at 5.1 times analysts’ earnings estimates for member companies.

The Micex’s drop compares with a 20 percent slide for Brazil’s Bovespa index, which trades at 10 times estimated earnings, according to data compiled by Bloomberg. The Shanghai Composite Index trades at 11 times estimated earnings, and the BSE India Sensitive Index has a ratio of 14.

OAO Severstal, Russia’s largest steelmaker by market value, tumbled the most in more than a week, dropping 5.3 percent to 419.90 rubles. The stock gained 11 percent in the previous three days.

The company plans to spin off its Nordgold NV mining unit by “late January 2012,” according to a regulatory filing today.

The spinoff will be carried out by exchanging Severstal shares and global depositary receipts for Nordgold shares, which are owned 100 percent by Severstal’s indirect unit, Lybica Holdings BV, Severtsal said.

--Editors: Alex Nicholson, Peter Branton

To contact the reporter on this story: Jason Corcoran at

To contact the editor responsible for this story: Frank Connelly at

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