Bloomberg News

Russia Stocks Rise for Fourth Day on Policy Easing Speculation

July 04, 2012

Russian stocks gained for the fourth day as speculation Chinese and European central bankers will ease monetary policy boosted appetite for riskier assets.

The Micex Index (INDEXCF) rose 0.5 percent to 1,444.31 by the close in Moscow, the highest level since May 2. Federal Grid Co. and OAO MRSK Holding added at least 1.8 percent after MRSK, Russia’s largest electricity distribution company, confirmed that Andrey Murov, deputy chairman of Federal Grid, was appointed acting chief executive officer. United Co. Rusal fell 1.3 percent as aluminum prices declined in London.

The European Central Bank will cut interest rates tomorrow, according to a Bloomberg survey of economists, and a government- linked newspaper in China said policy makers may lower lenders’ reserve requirements three more times this year. Further monetary policy easing by the U.S. Federal Reserve may be needed as the organization reduced its growth estimate for the world’s biggest economy, according to the International Monetary Fund.

“Right now investors are counting on an ECB decision,” Sergey Fundobny, head of research at Arbat Capital Management, which oversees $50 million in Russian equities, said by phone from Moscow. “The Russian market is past the bottom levels. I expect the market to extend gains for a few weeks.”

No Bull Market

Crude fell 0.8 percent to $86.95 a barrel in New York after reaching a one-month high yesterday. Oil and gas contribute about 50 percent of Russia’s state revenue.

Stocks fell as much as 0.8 percent earlier after Russian service-industry growth slowed for the fourth month in five in June as new business expanded the least since September 2010, according to HSBC Holdings Plc. U.S. markets are closed today for a national holiday.

The dollar-denominated RTS Index closed little changed at 1,408.21. MSCI Inc’s gauge of emerging-market stocks was also little changed at 956.26.

“The global slowdown has several more quarters to run, and so we do not see the advances as the start of a new cyclical bull market,” VTB Capital analysts led by Alexei Zabotkin, said in an e-mailed research note today.

Russia’s benchmark index, which has added 3 percent this year, trades at 5.4 times estimated earnings. That compares with 9.7 times projected earnings for MSCI’s emerging-market gauge, which has gained 4.4 percent this year.

Rosneft added 0.5 percent to 212.51 rubles, reversing earlier losses. The oil producer bought back about 3 percent of its stock or 322 million shares, according to a regulatory filing from the Moscow-based company today. That stake is valued at 68.3 billion rubles ($2.1 billion), based on a price of 212 rubles a share, which Rosneft’s board set in May.

Russia’s equities trade at the cheapest valuations among 21 emerging markets tracked by Bloomberg, reflecting concern the country is too reliant on energy exports.

-- With assistance from Scott Rose and Stephen Bierman in Moscow; Editors: Alex Nicholson, Linda Shen

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

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


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