Bloomberg News

Russian Stocks Rebound to Two-Week High on Crude, U.S. Housing

December 20, 2011

Dec. 20 (Bloomberg) -- Russian stocks rebounded to their highest in almost two weeks as oil, the country’s largest export revenue earner, gained after the U.S. Commerce Department said housing starts increased last month to the strongest level in more than a year.

The 30-stock Micex Index gained 2 percent to 1,409.84 by the close in Moscow, erasing an earlier loss of as much as 1.1 percent. OAO Transneft, the nation’s oil pipeline monopoly, jumped 2.5 percent, while OAO Rosneft, the biggest oil producer, rose 2.8 percent. OAO Gazprom, Russia’s natural gas export monopoly, increased 3.9 percent. The dollar-denominated RTS Index surged 1.9 percent to 1,395.79.

Stocks rallied after a report showed that US housing starts climbed 9.3 percent to a 685,000 annual rate, exceeding the highest estimate of economists surveyed by Bloomberg News and the most since April 2010, Commerce Department figures showed today in Washington. Crude for January delivery on the New York Mercantile Exchange climbed as much as $2.14, or 2.3 percent, to $96.02 a barrel, the highest price since Dec. 14.

“Today’s rally in Russian stocks is on the back of stronger than expected data in the U.S. with housing starts and Europe with German business confidence,” Marco Casas, vice- president of equity sales at Otkritie Capital in New York, said in e-mailed comments today.

German business confidence unexpectedly rose for a second month in December as two economic institutes predicted Europe’s biggest economy will stave off the debt crisis and avoid a recession in 2012.

Stocks Plunge

Russian stocks have plunged 6 percent this month after tens of thousands protested across the country against alleged electoral fraud in the Dec. 4 elections. Almost 40,000 people have signed-up to protest on Dec. 24 in Central Moscow.

“Russia is in the doldrums,” Julian Rimmer, a trader of Russian shares at CF Global Trading in London, wrote in e-mailed comments. “Investor attention is fading and the world is watching to see how Russia’s inchoate protest movement fares this weekend.”

Russia’s newly merged Micex-RTS exchange halted equity futures trading on its first day yesterday, sparking concern the Moscow bourse won’t be able to compete with global peers. Futures expiring in March on the dollar-denominated RTS index stopped trading about 12 minutes into the U.S. session yesterday due to a “technical problem,” Anton Storozh, a technical support specialist at the exchange said by phone from Moscow. Trading resumed 50 minutes before the end of the session, with the contracts sliding 1 percent to 133,350.

Futures Market

The world’s 10th biggest futures market, according to the Futures Industry Association, became part of Russia’s newly combined exchange yesterday after the Micex and RTS united in a bid to lure local companies and investors back to their home market. After halting trading more than 30 times in the second half of 2008, the Micex cut the number of stoppages to once in 2009 and five this year, according to spokesman Nikita Bekasov.

The Micex, which has lost 16 percent this year, trades at 4.8 times estimated earnings compared with 10 times for Brazil’s Bovespa index, 10.7 times for the Shanghai Composite Index and 13.8 times for the BSE India Sensitive Index, according to data compiled by Bloomberg.

-- Editors: Ash Kumar, Linda Shen

To contact the reporters on this story: Jason Corcoran in Moscow at jcorcoran13@bloomberg.net; Denis Maternovsky in Moscow at dmaternovsky@bloomberg.net

To contact the editor responsible for this story: Frank Connelly at fconnelly@bloomberg.net


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