Russian stocks rose, erasing earlier losses and posting the fourth weekly gain, as crude oil, the nation’s chief export earner, rallied on optimism European leaders will contain the region’s debt crisis.
The Micex Index (INDEXCF) climbed less than 0.1 percent to 1,454.08 by the close in Moscow, with the benchmark adding 0.7 percent in the week. OAO Uralkali, the world’s largest potash producer by volume, jumped 0.7 percent, while OAO Mobile TeleSystems added 0.6 percent. OAO Mechel (MTLR), Russia’s biggest coking-coal producer, slid 2 percent, leading the declining stocks. OAO Magnitogorsk Iron & Steel slipped 1.3 percent.
Russian stocks erased a loss of as much as 0.9 percent as oil gained after German Chancellor Angela Merkel Chancellor Angela Merkel said Germany is ready to help the Greek government combat its economic woes. Crude rose 0.4 percent to $96.62 in New York, extending its advance this week to 0.9 percent.
“High oil prices are supporting the Russian shares,” Viktor Markov, a senior analyst at the Moscow-based Kapital Asset Management LLC, said in an e-mailed note.
Russian stocks declined earlier after a report showed demand for U.S. capital goods such as machinery and communications gear dropped in July by the most in eight months, indicating companies are pulling back on investment.
Russia-dedicated equity funds posted outflows of $20 million in the week ended Aug. 22, compared with an inflow of $23 million a week earlier, according to Troika Dialog’s research note, which cited EPFR Global data.
Federal Grid Co., Russia’s high-voltage power transmission monopoly also known as FSK, dropped 0.5 percent to 22.08 kopeks. HSBC Holdings Plc cut the stock’s price estimate on lack of “clarity” relating to the results of the company’s merger with MRSK Holding, analysts led by Dmytro Konovalov said in today’s report.
“There is a high likelihood that the process could have a negative impact on Federal Grid’s investment case,” HSBC analysts wrote.
OAO MRSK Holding advanced 0.5 percent to 1.919 rubles, the highest level since Aug. 9. A Russian electricity distributor climbed on an Interfax report Deputy Prime Minister Arkady Dvorkovich is against OAO Rosneftegaz’s participation in the company’s merger with Federal Grid.
MSCI Inc. (MSCI:US)’s Russia Utility Index (MXRU0UT) fell 0.9 percent to 39.28.
Preferred shares of OAO Surgutneftegas added 7 percent this week, the biggest weekly advancer. Mechel dropped 6.3 percent in the week, the biggest decliner.
The Micex trades at 5.1 times earnings after gaining 3.7 percent this year. That compares with a multiple of 11.7 times for the MSCI Emerging Markets Index, which has added 5.5 percent.
Russian equities trade at the cheapest valuations among 21 emerging markets tracked by Bloomberg. Oil and gas contribute about 50 percent to the government’s revenue.
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