Bloomberg News

Micex Hits Six-Month High as Vote Concern Ebbs, Brent Tops $121

February 21, 2012

Feb. 20 (Bloomberg) -- Russian stocks touched a six-month high as rising oil prices boosted the outlook for producers in the world’s biggest energy exporter and concern elections will hurt the nation’s economic recovery receeded.

The 30-stock Micex advanced 0.7 percent to 1,579.19 by 6:45 p.m. in Moscow, the strongest since Feb. 15, after trading at the highest intraday level since Aug. 8. OAO Surgutneftegas, an oil producer, jumped 1.4 percent, while OAO GMK Norilsk Nickel, Russia’s biggest miner, added 1.9 percent. The dollar- denominated RTS Index increased 1.1 percent to 1,674.27.

Brent crude rose 1.3 percent to $121.15 a barrel after Iran said it halted some exports and China loosened banks’ reserve requirements to spur lending and support growth. Prime Minister Vladimir Putin will win the March 4 presidential election in the first round, getting almost four times more votes than his nearest challenger, a state-run pollster said in an e-mailed statement today.

China’s cut is “adding to the momentum,” Julian Rimmer, a trader of Russian shares at CF Global Trading in London, said in an e-mail today. “Russia also has $120 Brent and the prospect of a first-round victory in the presidential election for Putin propelling it forward.”

Putin would garner 58.6 percent of the vote, beating Communist leader Gennady Zyuganov by almost 44 percentage points, the All-Russian Center for the Study of Public Opinion said in an e-mailed statement today. The premier needs to win more than 50 percent to avoid a second-round runoff.

Fraud Allegations, Outflows

Putin’s ruling party won just over half the seats in a Dec. 4 parliamentary vote, triggering the biggest anti-government protests in more than a decade amid fraud allegations and boosting capital flight to $37.8 billion in the fourth quarter.

After dropping 6.5 percent in December, the Micex is up 13 percent this year and trades at 6.1 times analysts’ earnings estimates for member companies. Brent’s 13 percent gain in the same period has boosted the allure of the nation’s stocks, the cheapest among 21 emerging markets tracked by Bloomberg.

Equity funds dedicated to Russia took in $109 million in the week ended Feb. 15, the third consecutive week of net inflows and the longest rising streak since November, according to EPFR Global.

Brazil, China Gauges

Brazil’s Bovespa index, which is valued at 10.7 times estimated earnings, has climbed 14 percent, according to data compiled by Bloomberg. The Shanghai Composite Index trades at 9.7 times estimated earnings, and the BSE India Sensitive Index has a ratio of 15.7.

“Steel and mining shares should be to the forefront of the gains, while banks will benefit from an expected stronger ruble and the higher oil price after Iran announced some export curbs to Europe,” Chris Weafer, chief strategist at Troika Dialog in Moscow, wrote in a research note e-mailed today.

OAO Sberbank, Russia’s biggest lender, rose 0.8 percent to 97.51 rubles, its strongest level since Aug. 4. The ruble appreciated 0.4 percent to 29.7850 against the dollar, extending a 0.6 percent increase in the five days through Feb. 17, its seventh consecutive weekly gain.

Norilsk Nickel jumped the most since Feb. 13, to 5,764 rubles. OAO Mechel, Russia’s biggest producer of coal for steelmaking, added 1.5 percent to 326.90 rubles.

--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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