Bloomberg News

Facebook Lockup Ending Triggers Yandex Rally: Russia Overnight

August 16, 2012

Yandex NV (YNDX:US) jumped the most in five months in New York trading on speculation investors selling Facebook Inc.’s stock at the end of a lockup period will move proceeds into stocks of Russia’s biggest Internet search engine.

Shares of the Hague-based company surged 6.6 percent to $21.46 yesterday, leading gains on the Bloomberg Russia-US Equity Index (RUS14BN) of the most-traded Russian stocks listed in the U.S. The measure climbed 0.1 percent to 94.96. RTS stock-index futures expiring in September added 0.8 percent to 143,905. OAO Gazprom, the country’s natural-gas export monopoly, increased to a three-month high after oil rose above $95 a barrel for the first time in three months.

While Facebook, the biggest social network website, disappointed investors on July 26 by reporting slowing sales growth in the second quarter, Yandex reiterated five days later that it expects (YNDX:US)sales to increase as much as 45 percent this year. Yandex, which gets most of its revenue from online ads, said it benefits from a quickening economic expansion in Russia, the world’s largest energy exporter.

“Investors want to see cash and feel it in their pockets, that’s why they sell Facebook (FB:US) and buy Yandex,” Iouli Matevossov, a senior analyst at Alfa Bank, said by phone from Moscow yesterday. “The Russian company proved to be good at showing growth in terms of very real cash as opposed to Facebook.”

‘Good at Making Money’

The Market Vectors Russia ETF (RSX:US), the biggest U.S.-traded fund that holds Russian shares, increased 0.9 percent to $28.02, the highest level since May 3. The RTS Volatility Index, which measures expected swings in stock futures, dropped 2.1 percent to 29.05.

Yandex said on July 31 that second-quarter net income, before adjustments to additional taxes, rose 76 percent to 1.98 billion rubles ($61.5 million). Revenue expanded 50 percent in the first half of the year from the same period a year ago.

Facebook plunged to a record low of $19.87 yesterday after freeing up an additional 271.1 million shares, boosting by 60 percent the number available to trade.

The Menlo Park, California-based company, worth (FB:US) about $48 billion, has lost more than $40 billion in market value since the offering, making it the worst performer among all large IPOs on record, according to data compiled by Bloomberg. The company reported sales growth (FB:US) of 32 percent in the second quarter from the year-ago period, down from 45 percent in the first quarter and 55 percent in the fourth quarter.

“Yandex is very good at making money from their users, while Facebook is yet to learn how to do it,” Matevossov said. “Facebook is good at getting users, not money.”

Largest Oil Producer

Russia, the world’s largest oil producer outside of the Organization of Petroleum Exporting Countries, received about half of its 2011 budget revenue from sales of oil and natural gas, according to the government data.

Russia’s gross domestic product rose 4 percent in the second quarter, compared with a 3.4 percent growth in the second quarter of 2011, the Federal Statistics Service in Moscow said on Aug. 10.

Oil for September delivery rose for a third day, gaining 1.3 percent to $95.60 a barrel on the New York Mercantile Exchange yesterday. The price reached $95.75, the highest intraday level since May 14.

Spain is about to receive an emergency disbursement from the 100 billion-euro ($123 billion) bailout of its financial system because of restrictions the European Central Bank imposed on bank borrowing, according to a person familiar with the matter.

“The market is supported by stronger oil,” Yan Gloukhovski, a trader at Alfa Capital Markets in London, said by e-mail yesterday. In order to sustain the growth, “we need more certainty on Europe, especially in relation to Spain’s decision on whether to apply for rescue funds,” he said.

Gazprom Gains

American depositary receipts of Gazprom rose 1.6 percent to $9.89 yesterday, the highest since May 11. Gazprom added 1.3 percent to 156.65 rubles, or $4.92 on the Micex. One ADR is equal to two ordinary shares.

Gazprom links its prices to oil and refined products with a time lag, a method that dates back to the 1970s, when the fuels were more commonly used in power generation.

Brent for September settlement, which expired yesterday, advanced 0.6 percent to $116.90 a barrel on the London-based ICE Futures Europe exchange. Urals crude rose 0.3 percent to $116.93 per barrel yesterday.

To contact the reporter on this story: Halia Pavliva in New York at hpavliva@bloomberg.net

To contact the editor responsible for this story: Tal Barak Harif at tbarak@bloomberg.net


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Companies Mentioned

  • YNDX
    (Yandex NV)
    • $30.2 USD
    • 0.56
    • 1.85%
  • FB
    (Facebook Inc)
    • $69.27 USD
    • -0.13
    • -0.19%
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