Russian shares rebound from a four- month low as crude oil, the nation’s chief export earner, increased and consumer stocks advanced.
The Micex Index (INDEXCF) climbed for the first time in dour days, 0.6 percent to 1,417.18 by 10:52 a.m. in Moscow. Trading volume was 21 percent above the 30-day average, while 10-day price swings increased to 8.524. OAO Magnit, Russia’s biggest retailer by market value, rose 1.7 percent to 6,436.90 rubles, the highest intraday price since its July 2006 listing after Standard & Poor’s yesterday raised the company’s credit rating to BB from BB-, citing “robust” earnings growth.
Crude oil climbed 0.2 percent to $93.55 in New York, the second day of gains. Russia receives about half its budget revenue from oil and natural gas. Out of 50 stocks on the Micex, 38 rose and 12 fell. The dollar-denominated RTS Index (RTSI$) added 0.6 percent to 1,419.63.
“All the risks that were weighing on the Russian market in February and March have been priced in by now and the situation is turning to the bright side,” Alexander Ivanischev, head of research at Infina Investment Co. in Moscow, said by phone. “Oil fell a lot last week so now we’re seeing a rebound, while Magnit is an excellent company, its management has chosen the right strategy and stuck to it.”
OAO PhosAgro, Europe’s largest phosphate-fertilizer producer, fell as much as 5.7 percent, trading down 3.7 percent at 1,329.30 rubles. The stock tumbled 4.5 percent to $14.10 in London. Phosagro’s controlling owners, Andrey Guryev and his family, are selling a 9 percent stake for the company to gain entry into the MSCI Russia index.
A group of companies, controlled by the Guryev family, is offering at least 11.1 million of existing shares and global depositary receipts, according to a statement from Phosagro late yesterday. The Guryev family will reinvest about 45 percent of the proceeds in new shares issued by the Russian company, according to the statement. Phosagro plans to sell as many as 13.5 million new shares after the offering, it said.
Federal Grid Co. power transmission company dropped as much as 3.5 percent, trading down 3.2 percent at 13.58 kopeks. OAO MRSK Holding, the nation’s largest electricity distribution company, fell as much as 4.1 percent before trading down 3.3 percent at 1.445 rubles.
The board of directors of OAO Russian Grids, as the merged company is known, approved issuing an additional 161 billion shares at 2.79 rubles each, which can be paid for in cash or swapped for Federal Grid shares at 28.36 kopeks each, according to a filing yesterday. Russia will exchange the ordinary stock it holds in Federal Grid for new shares of Russian Grids, acquiring 86 percent in the new company as a result.
“We do not rule out a further correction in Federal Grid shares due to the expected shift of liquidity to MRSK Holding and subsequent decrease in the weight of Federal Grid in MSCI indices,” Alfa Bank analysts said in an e-mailed note. “We also do not see clear catalysts for MRSK Holding, even at the current depressed price levels, taking into account tariff growth restrictions and its high capex needs.”
President Vladimir Putin in November signed a decree transferring 79.55 percent of Federal Grid’s shares to MRSK Holding. Federal Grid will become a unit of Russian Grids and its shares will continue to be listed and trade on the Moscow Exchange, according to today’s statement.
The RTS Volatility Index, which measures expected swings in stock futures, rose 2.3 percent today. The Market Vectors Russia ETF, the largest dedicated Russian exchange-traded fund, added 0.9 percent to $27.21 yesterday. The Bloomberg Russia-US Equity Index (RUS14BN) increased less than 0.1 percent to 94.60 in New York yesterday.
Russian equities have the cheapest valuations among 21 emerging markets tracked by Bloomberg. The Micex trades at 5.2 times estimated earnings and has lost 3.9 percent this year, compared with 10.2 times for the MSCI Emerging Markets Index, which has slid 4.1 percent this year.
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