Bloomberg News

Russia Stocks Climb 1st Day in Seven on Sberbank, Mechel Profit

May 10, 2012

Russian stocks climbed for the first time in seven days after OAO Sberbank, the country’s biggest lender, and OAO Mechel (MTLR), its largest coking-coal producer, posted rising profits.

The 30-stock Micex Index (INDEXCF) gained 1.8 percent to 1,408.31 by the close in Moscow, paring a 6.1 percent drop in the past six days and rising the most since April 19. Sberbank added 2.7 percent and Mechel rose 5.4 percent. OAO Novatek rallied 5.5 percent while United Co. Rusal, the world’s biggest aluminum producer, slid 1.3 percent.

Sberbank, which has the third-biggest weighting in the Micex at 14 percent, said it increased profit by about 14 percent in the first four months of the year. Mechel posted an almost eightfold earnings jump in the fourth quarter as the ruble strengthened, leading to a foreign-exchange gain. Stocks extended their rally after U.S. first-time claims for jobless benefits fell to a one-month low last week.

“The market tends to look at Sberbank as a benchmark,” Tom Mundy, the chief equities strategist at Otkritie Capital, said by phone from Moscow. “It signals that the market is back on track. We should be encouraged by the Sberbank earnings.”

Sberbank climbed to 91.74 rubles after rising as much 2.8 percent earlier. Mechel’s ordinary shares rose to 229.20 rubles, the biggest gain since Jan. 26. Shareholders as of May 22 are eligible to vote on the dividend recommendation of 8.06 rubles a common share and 31.28 rubles per preferred share at a June 29 annual meeting, Mechel said today in a regulatory filing. The company’s preferred stock surged 11 percent to 201.50 rubles.

Novatek jumped to 333.52 rubles, the strongest advance since July 21 ahead of quarterly earnings scheduled for May 11. First-quarter revenue at Russia’s second-largest natural-gas producer climbed 7.5 percent to $1.65 billion from a year earlier, according to the average estimate of seven analysts surveyed by Bloomberg.

Rusal, China

Rusal retreated to 196.98 rubles, the lowest price since Jan. 10 after Renaissance Capital forecast a 5 percent decline in first-quarter margins from the previous three-month period.

A total 43.6 billion shares changed hands on the Micex, according to data on the exchange’s website, down from the 53.7 billion traded May 4. The Micex was closed yesterday for the Victory Day holiday and will be open May 12.

Emerging-market stocks reversed declines as U.S. jobless claims dropped by 1,000 to 367,000 in the period ended May 5, the lowest since the end of March, the Labor Department said today in Washington. U.S. stocks rose, with the Standard & Poor’s 500 Index rebounding from a two-month low.

Copper, tin and lead advanced on the London Metal Exchange, while crude was little changed at $96.72 in New York.

Russia, the world’s biggest energy exporter and the largest producer of nickel and palladium, received almost 50 percent of budget revenue from oil and gas sales last year, according to government estimates.

Rates on Hold

Russia’s central bank refrained from cutting interest rates for a fifth month today, signaling unwillingness to introduce monetary stimulus to bolster growth as it focuses on containing inflation.

The inflation rate in the world’s largest energy exporter dropped below Italy’s for the first time in March and the pace of price groth slowed further last month as food prices fell.

Russian stocks trade at 5.3 times estimated earnings, having added 0.4 percent this year. That compares with a 7.2 percent gain for the MSCI Emerging-Market Index which trades at 9.9 times projected earnings.

Trading volumes on the Micex slumped 30 percent in April from the month before compared with a 22 percent drop in the same period a year earlier.

To contact the reporter on this story: Ksenia Galouchko in New York at kgalouchko1@bloomberg.net

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


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