Russian stocks climbed to a two-month high as oil, the nation’s biggest export earner, gained and investors bought riskier assets on speculation central banks from Europe to China may ease monetary policy to bolster growth.
The Micex Index (INDEXCF) rose 2.5 percent to 1,437.45 by the close in Moscow, the strongest level since May 3. OAO Raspadskaya led gains, climbing 8 percent after Troika Dialog raised its recommendation for the coal producer to buy from hold, citing “strong” cash flow and dividend capacity. OAO Magnitogorsk Iron & Steel increased 4.9 percent as the steelmaker dropped a proposed takeover of Australia’s Flinders Mines Ltd.
Crude oil gained 4.2 percent to $87.30 a barrel in New York. Oil and gas contribute about 50 percent of Russia’s state revenue. Emerging-market stocks rose as the European Central Bank is forecast by economists to cut interest rates this week to help curb the debt crisis, while a state-owned newspaper in China said the time is right to lower banks’ reserve-requirement ratios. Declining employment figures in the U.S. this week may prompt the Federal Reserve to initiate fresh stimulus, BNP Paribas SA said.
“European authorities are doing the right thing by addressing economic growth concerns,” Ivan Tchakarov, chief economist at Renaissance Capital in Moscow, said by phone. “Russia has suffered so much that the market will be rising for the next few weeks.”
Magnitogorsk, known as MMK, dropped its bid for Flinders yesterday after a Russian court postponed a ruling on a minority shareholder’s effort to block the takeover.
The Micex posted the biggest three-day advance since Oct. 10. MSCI Inc’s gauge of emerging-market stocks gained 1.6 percent to 956.78, the highest intraday level since May 14.
Brazil, Russia, India and China, known as the BRICs, will comprise 20 percent of the world economy this year after growing more than four-fold in the past decade, International Monetary Fund data show. At the same time, their combined stock-market value has dropped to a three-year low of 16 percent of the total invested in equities, according to data compiled by Bloomberg.
Russia’s benchmark gauge trades at 5.2 times estimated earnings, the highest level since March 28, and has added 2.5 percent this year. That compares with 9.7 times projected earnings for MSCI’s emerging-market gauge, which has gained 4 percent this year.
“Data weakness is fueling investor hopes for policy action, which may come as early as this week with the ECB expected to cut rates,” Alfa Bank analysts led by Peter Szopo, said in an e-mailed research note.
E.On Russia rallied 1.2 percent to 2.5106 rubles, the highest level since June 18. The power company raised its profit forecast after reaching a long-term price agreement with OAO Gazprom, Russia’s natural gas export monopoly.
Standard & Poor’s GSCI Index rose 3 percent to 615.10, the highest intraday level since May 30.
Renaissance Capital forecast an increase in Russian market valuations by the end of the year as companies pay dividends, according to an e-mailed research note today. Companies will pay $8.4 billion in dividends and buy back up to $6 billion of shares by the end of August, which investors may reinvest into the Russian market, Renaissance analysts led by Milena Ivanova- Venturini said in the note.
Russian equities trade at the cheapest valuations among 21 emerging markets tracked by Bloomberg, reflecting concern the country is too reliant on oil.
To contact the reporter on this story: Ksenia Galouchko in Moscow at firstname.lastname@example.org
To contact the editor responsible for this story: Gavin Serkin at email@example.com