Bloomberg News

Futures Climb on Rising Oil as Norilsk Gains: Russia Overnight

February 09, 2012

Feb. 9 (Bloomberg) -- Russian equity futures rose and OAO GMK Norilsk Nickel climbed to a three-month high in New York as oil advanced, bolstering the outlook for the world’s biggest energy exporter.

Futures expiring in March on the dollar-denominated RTS Index added 0.5 percent to 164,960 in the U.S. yesterday, as the Bloomberg Russia-US 14 Index of Russian companies traded in New York gained 0.5 percent to 109.18, a six-month high. Brent crude reached the highest level since July as Iran dismissed U.S. sanctions against its financial institutions as “psychological warfare.”

Euro-area finance ministers will hold an emergency meeting in Brussels today as the Greek government pushes to complete talks on terms for a second rescue package aimed at avoiding a default. Russia’s 30-stock Micex Index slipped 8.8 percent last year as the European crisis spurred investors to avoid emerging- market assets perceived as posing greater risk.

“Investors are clearly not anywhere near as fearful as they were last summer and fall about Europe having a Lehman type of event, and that’s one reason Russian equities have rallied,” Nelson Saiers, who oversees $639 million at Alphabet Management LLC in New York, said yesterday. “On crude, the geopolitical risk with Syria and Iran is here to stay for a while, and that’s keeping oil prices high which is good for Russia.”

As of Sept. 30, Alphabet owned shares in OAO Mechel, Russia’s largest coal producer for steelmakers, and VimpelCom Ltd., the country’s third-largest mobile carrier by subscribers, according to data compiled by Bloomberg.

U.S. Sanctions

Crude for March delivery rose 0.3 percent to settle at $98.71 a barrel on the New York Mercantile Exchange, as Brent oil prices increased 0.8 percent to $117.20, the highest closing price since July 28. Urals crude, Russia’s chief export blend, fell 0.2 percent to $117.80, snapping a six-day advance.

Ramin Mehmanparast, spokesman for the Iranian Foreign Ministry, said yesterday that the latest U.S. sanctions against his country’s financial institutions were “psychological warfare.” On Feb. 6, President Barack Obama ordered a block on property and interests in property belonging to the Iranian government, its central bank and all Iranian financial institutions.

Moscow-based Norilsk, the world’s largest producer of nickel and palladium, gained 1.1 percent to $20.25, widening the premium over its Micex-traded shares to 1.41 percent, from 1.35 percent on Feb. 7.

Norilsk shares added 0.8 percent in Moscow to 5,936 rubles, or $199.55. One Norilsk ADR represents one-tenth of an ordinary share. The Micex stock trades at 6.7 times earnings, the highest valuation since October.

Russia ETF Drops

The Market Vectors Russia ETF, a U.S.-traded fund that holds Russian shares, fell from a three-month high, dropping 0.3 percent to $31.91. The RTS Volatility Index, which measures expected swings in the index futures, declined 1.7 percent to 31.68.

OAO Gazprom, the world’s biggest natural-gas producer, will outperform companies such as OAO Rosneft this week because investors expect “positive” news from top managers meeting investors in London and New York next week, Renaissance Capital analysts, led by London-based Ilya Balabanovsky, said in a report yesterday.

Gazprom ADRs advanced 0.2 percent to $12.75 in New York yesterday, the highest closing price since Aug. 5, 2011. Shares in Moscow gained 0.4 percent to 188.79 rubles, or $6.34. One depositary receipt is equal to two ordinary shares. Balabanovsky rates Gazprom “hold” with a target ADR price of $15, according to the report.

Copper Gains

OAO Gazprom Neft, Gazprom’s oil arm, releases its preliminary unaudited fourth-quarter earnings today.

The Standard & Poor’s GSCI index of 24 raw materials rose 0.3 percent to 674.96. Copper futures rose to a 20-week high after the Chinese government pledged to support first-time homebuyers in China, the world’s biggest consumer of the metal used in pipes and wires. On the Comex in New York, copper futures for March delivery advanced 0.9 percent to close at $3.9095 a pound. Nickel, tin, aluminum and zinc fell on the London Metal Exchange.

--Editors: Emma O’Brien, 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: Emma O’Brien at eobrien6@bloomberg.net


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