Bloomberg News

Russian Stocks Rise Most in Week as Ruble Boosts Sberbank, VTB

January 26, 2012

Jan. 25 (Bloomberg) -- Russian stocks advanced the most in a week as Apple Inc.’s better-than-expected quarterly results helped lift stock prices and the ruble surged to its strongest level in more than two months, boosting the outlook for banks.

The 30-stock Micex Index rose 0.7 percent to 1,498.79 by the 6:45 p.m. close in Moscow, its biggest daily advance since Jan. 17. OAO Sberbank and VTB Group, the country’s two largest banks, led the gauge higher as the ruble surged to its strongest level against the dollar since Nov. 15. The dollar-denominated RTS Index added 1.3 percent to 1,534.14, its highest close since Dec. 5.

Apple’s quarterly profit more than doubled, beating analyst estimates, and as investors awaited the U.S. Federal Open Market Committee’s forecasts for its key interest rate. Urals crude oil, Russia’s main export blend, was up 0.3 percent to $109.25 a barrel.

“Global markets are driving Russian indexes higher as investors look more upbeat after Apple results exceeded estimates,” Alexander Zakharov, head of international equity sales at Finam Investment Co, in Moscow, said by e-mail. “We could expect some fund inflows into equities since the stocks are cheap and most of the bad news related to a possible recession in Europe and a slowdown in the world economy is priced in.”

Sberbank jumped 2.4 percent to 87.08 rubles as the ruble gained and RIA Novosti said the bank’s retail-lending growth will accelerate. VTB surged 3.2 percent to 6.757 kopeks, the biggest advance in the Micex Index and its highest level since Dec. 5.

Discount to Emerging Markets

The Russian currency added 0.5 percent to 30.72 versus the dollar, its eighth day of gains. A stronger ruble discourages Russians from withdrawing and converting ruble deposits, the main source of funding for Sberbank, which holds 47 percent of the nation’s household deposits.

Rosneft, Russia’s largest oil company, fell 0.8 percent to 226.84 rubles, while OAO Gazprom, the state-controlled gas export monopoly, jumped 1.1 percent to 185.21 rubles, erasing yesterday’s 0.5 percent drop.

The Micex is up 6.9 percent this year and trades at 5.7 times analysts’ earnings estimates for member companies.

The gauge reached a 43 percent discount to the MSCI Emerging Markets Index on Jan. 23, the biggest gap since August, data compiled by Bloomberg show. Russian stocks have maintained the lowest valuations among the biggest emerging nations for more than four months as protests following December elections deterred investors.

‘Cheap Enough’

Russian stocks are “cheap enough” to lure buyers, Chris Weafer, chief strategist at Troika Dialog, Russia’s oldest investment bank, said by phone yesterday from London. “If the global picture recovers, Russian stocks could really rise from here.”

The gauge retreated 17 percent in 2011, compared with an 18 percent drop for Brazil’s Bovespa index, which is valued at 9.9 times estimated earnings, according to data compiled by Bloomberg. The Shanghai Composite Index trades at 9.5 times estimated earnings, and the BSE India Sensitive Index has a ratio of 15.1.

--Editors: Alex Nicholson, Peter Branton

To contact the reporter on this story: Denis Maternovsky in Moscow at dmaternovsky@bloomberg.net

To contact the editor responsible for this story: Gavin Serkin at gserkin@bloomberg.net


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