Bloomberg News

Russia Stocks Rise to 4-Month High as Draghi Spurs Optimism

September 07, 2012

Russian stocks rallied to a four- month high, as steelmakers gained on the optimism the European Central Bank’s unlimited debt purchase plan will boost demand for metals.

The Micex Index (INDEXCF) surged 1.3 percent to 1,474.58 by the close in Moscow, the strongest level since April 20 and a 3.6 percent increase in the week. Steelmakers rose, with OAO Mechel (MTLR) jumping 11 percent, OAO Novolipetsk Steel surging 6.5 percent and OAO Magnitogorsk Iron & Steel gaining 5.4 percent. OAO Severstal climbed 3.4 percent.

ECB President Mario Draghi said yesterday policy makers agreed on a program to reduce interest rates for struggling nations and fight speculation of a breakup of the euro. The top Chinese planning body announced plans to build highways, subways and ports this week, seeking to revive an economy growing at the slowest pace in three years.

“Investors are now confident that there won’t be any cataclysms this year,” Dmitry Mikhailov, who manages $130 million in assets at Renaissance Capital in Moscow, said by phone. “The European debt crisis issue has been postponed for at least a few months, that was the main message investors took from Draghi’s speech.”

The RTS Index jumped 2.4 percent to 1,471.80, after rising more than 20 percent from this year’s low during the day. The gauge hit this year’s lowest level on June 1. The RTS Index rose 2.4%. The gauge was earlier more than 20 percent above its lowest level this year reached on June 1.

U.S. Payrolls

Stocks pared gains as the U.S. economy added 96,000 workers last month following a revised 141,000 rise in July that was smaller than initially estimated, Labor Department figures showed today in Washington. The median estimate of 92 economists surveyed by Bloomberg called for a gain of 130,000.

United Co. Rusal, the world’s largest aluminum producer, fell 0.8 percent.

Russia seeks to consolidate its banking system and supports mergers in the sector, President Vladimir Putin said at the Asia-Pacific Economic Cooperation summit in Vladivostok today. The nation won’t force banks to consolidate, Putin said.

OAO Sberbank, the nation’s biggest lender, fell less than 1 percent to 93.93 rubles. VTB Group jumped 3.8 percent to 5.66 kopeks.

The Russian government has spent more than $20 billion to showcase Vladivostok, 4,000 miles east of Moscow, as leaders gather for this week’s APEC summit.

APEC Summit

Russia is looking to Asia as the European Union, which accounts for about half of its trade, grapples with a three- year-old debt crisis. Putin, who’s targeting faster growth and a greater role for investment, says the 21 APEC economies represent the best bet to fuel global expansion as traditional engines such as the U.S. and Europe flag.

Standard & Poor’s GSCI Index of raw materials gained 0.2 percent to 673.10. Crude fell 0.3 percent to $95.27 in New York. Oil and gas contribute about 50 percent to Russia’s state revenue.

The Micex trades at 5.5 times estimated earnings and has rallied 5.2 percent this year. That compares with a multiple of 10 times and a 5.8 percent advance for the MSCI Emerging Markets Index.

Russian equities have the lowest valuations based on estimated earnings among 21 emerging markets tracked by Bloomberg.

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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