Bloomberg News

RTS Futures Rise as U.S. Economy Shows Gains: Russia Overnight

January 02, 2012

Dec. 30 (Bloomberg) -- RTS stock futures rose and OAO Mechel rebounded as better-than-forecast U.S. data signaled the world’s largest economy is weathering Europe’s debt crisis.

Futures on the dollar-denominated index expiring in March added 0.7 percent to 135,290 yesterday in New York as the Bloomberg Russia-US 14 Index of Russian companies traded in the U.S. rose 0.1 percent to 89.89. American depositary receipts of Mechel, Russia’s largest producer of coal for steelmakers, jumped the most in a month, creating the largest gap with its Moscow-traded shares since October.

Business activity in the U.S. expanded in December, prompting companies to boost employment. The Institute for Supply Management-Chicago Inc. reported its business barometer at 62.5 this month, exceeding the median forecast of 61 among economists surveyed by Bloomberg. A recovery in U.S. manufacturing may help to bolster the price of oil and gas, Russia’s largest export earners.

“Better-than-expected news out of the U.S. makes for a positive picture,” Alec Young, a global equity strategist at Standard & Poor’s in New York, said by phone yesterday. “Russia should participate in a global recovery in 2012 as a mild recession in Europe ends by the second half. We may be passing through the worst point of fear from an equity perspective.”

Italy sold yesterday 2.5 billion euros ($3.24 billion) of securities due in 2014 to yield 5.62 percent, down from 7.89 percent at the previous sale on Nov. 29, a sign of investor confidence.

Election Outlook

Russian equities, Young said, may underperform peers in the run-up to the country’s March elections. Prime Minister Vladimir Putin has promised a fair contest in a bid to head off more demonstrations after at least 30,000 people rallied in Moscow on Dec. 24 over alleged ballot box fraud in a parliamentary vote.

The RTS Index in Moscow declined for a third day, dropping 1.2 percent to 1,365.13, while the 30-stock Micex Index rose 0.3 percent to 1,387.06. The RTS Volatility Index, which measures expected swings in the index futures, dropped for the 11th time in 12 days, falling 6.4 percent to 38.63 points. The Market Vectors Russia ETF, a U.S.-traded fund that holds Russian shares, declined for a fourth day, losing 0.1 percent to $26.24.

Mechel gained 5.8 percent to $8.36 in New York after shares in Moscow fell 0.7 percent to 254.10 rubles, or the equivalent of $7.92. One ADR represents one ordinary share. Mechel’s ADRs closed at the largest premium to the Moscow stock since Oct. 30.

OAO GMK Norilsk Nickel rose 2.3 percent in New York to $15.36 as nickel gained 1.6 percent to $18,195 a ton on the London Metal Exchange and Russia’s largest miner said it plans to increase capital spending to more than $3 billion in 2012. Norilsk shares added 2.9 percent on the Micex to 4,925 rubles, or $153.60. One ADR represents one-tenth of an ordinary share.

Commodities Advance

Standard & Poor’s GSCI index of 24 raw materials rose 0.1 percent as copper futures for March delivery climbed for the first time in three days after pending sales of U.S. homes rose than forecast in November. Copper traded on the Comex in New York settled at $3.37 a pound, a gain of 0.4 percent.

The Standard & Poor’s 500 Index advanced 1.1 percent to 1,263.02 as U.S. jobless claims dropped to a three-year low. The four-week moving average for claims, a less volatile measure than the weekly figures, dropped to 375,000 last week, the lowest level since June 2008, Labor Department figures showed yesterday in Washington.

The Micex has lost 18 percent in 2011 and trades at 4.9 times analysts’ earnings estimates for member companies. That compares with an 18 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 10.5 times estimated earnings, and the BSE India Sensitive Index has a ratio of 13.5.

--Editors: Brendan Walsh, Marie-France Han

To contact the reporters 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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