Bloomberg News

Gazprom Leads Biggest Index Gain in Two Weeks: Russia Overnight

January 04, 2012

Jan. 4 (Bloomberg) -- Signs of an improving U.S. economy sent OAO Gazprom to a one-month high in New York and increased prospects for Russian share sales in America this year.

Gazprom, the world’s biggest natural-gas exporter, added 5.1 percent, making it the biggest contributor to a 4.1 percent gain for the Bloomberg Russia-US 14 Index of Russian companies traded in New York. Coal producer OAO Mechel surged 6.7 percent yesterday, the most in a month, as an expansion in manufacturing from the U.S. to China signaled higher demand for the country’s oil, gas and other commodities. Futures on the dollar- denominated RTS index expiring in March rose 0.5 percent.

The U.S. factory index rose the most in six months in December while November construction spending grew at twice the rate forecast by analysts. A stronger U.S. economy may spur Russian companies to favor New York over Europe as they consider issuing as much as $10 billion in equity this year, said Anthony Moro, a managing director at the Bank of New York Mellon Corp.

“We’re seeing renewed interest in the U.S. market from Russian companies because of a more positive outlook for growth,” said Moro, whose bank acted as depositary agent for 84 percent of Russian equity listings in the U.S. last year. “All the bad news is baked into stocks so anything that is less than bad or actually good is going to be seen as a buying signal.”

United Co. Rusal, the world’s largest aluminum producer, was unchanged at HK$4.89 in Hong Kong trading as of 11:34 a.m. local time, having 0.8 percent earlier. The MSCI Asia Pacific Index gained 1 percent today after a gauge of U.S. manufacturing rose at the fastest pace in six months.

U.S. Premium

Mechel may move an initial public offering of its coal unit to New York this year after delaying a planned sale in London, three people familiar with the matter said last month. Russia’s central bank said it June it would seek to sell a 7.6 percent stake in OAO Sberbank, Russia’s largest lender, for as much as $7 billion. The sale may take place in New York, Moro said.

Sberbank’s American depositary receipts jumped the most in five weeks yesterday, adding 5.9 percent to $10.53 after shares rose 3.8 percent in Moscow to 82.47 rubles, or the equivalent of $2.61, creating a 1.3 percent premium for the ADRs. One ADR represents four ordinary shares.

Mechel, Russia’s largest producer of coal for steelmakers, gained as metals prices rose in London and New York. The ADRs added 6.7 percent to $9.07 after shares in Moscow climbed 4.7 percent to 283 rubles, giving the receipts a 1.5 percent premium. One ADR is equal to one ordinary share.

Gazprom, RusHydro

Gazprom rose 5.1 percent to $11.23 in New York, the highest price since Dec. 5, on bets gas prices will rally from two-year lows in 2012. The company’s shares advanced 3.6 percent to 177.47 rubles in Moscow, or the equivalent of $5.60. One depositary receipt is equal to two ordinary shares.

OAO RusHydro, Russia’s largest renewable energy producer, advanced the most since Nov. 11 after Interfax news agency reported the company plans to cut investment plans for 2012 and 2013 to keep debt at no more than 3 times its earnings before interest, taxes, depreciation and amortization expenses. The report cited an unidentified person with knowledge of the plan.

RusHydro ADRs surged 7.3 percent to $3.25. The company’s ruble-denominated shares rose 3.4 percent yesterday to 1.0023 rubles, creating a 2.8 percent premium for the ADRs. One depositary receipt is equal to 100 ordinary shares.

Commodity Prices

The RTS Index advanced 3.9 percent in Moscow and the 30- stock Micex Index gained 3 percent to the highest since Dec. 8. The RTS Volatility Index, which measures expected swings in the index futures, rose for a second day, increasing 2.7 percent. The Market Vectors Russia ETF, a U.S.-traded fund that holds Russian shares, added 3.6 percent to $27.62.

The Standard & Poor’s GSCI Spot Index of 24 commodities gained the most since May, climbing 3.4 percent on signs that increased global factory output will boost demand.

Oil surged to a seven-month high yesterday as concern persisted that further sanctions against Iran may disrupt shipments. Crude for February delivery increased 4.2 percent to settle at $102.96 a barrel on the New York Mercantile Exchange. The contracts dropped 0.2 percent in electronic trading today.

Brent oil for February settlement increased 4.4 percent to $112.13 a barrel on the London-based ICE Futures Europe exchange. Urals crude, Russia’s chief export blend, gained 4.5 percent to $109.72. Oil and natural gas contribute about 17 percent of Russia’s gross domestic product.

The Micex lost 17 percent in 2011 and trades at 5.5 times analysts’ earnings estimates for member companies. That compares with an 18 percent slide last year for Brazil’s Bovespa index, which trades at 9.3 times estimated earnings, according to data compiled by Bloomberg. The Shanghai Composite Index trades at 10.6 times estimated earnings, and the BSE India Sensitive Index has a ratio of 13.9.

--Editors: Brendan Walsh, 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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