Russia’s benchmark equity gauge snapped thee days of declines, rebounding from the lowest level in more than a year.
The Micex Index (INDEXCF) added 0.6 percent to 1,289.10 by 10:42 a.m. in Moscow, paring its fifth weekly loss to 4.1 percent. The 14-day relative strength index on the Micex climbed to 33.8 from 31.4 yesterday, the closest since April to a level of 30, which signals a rebound to some analysts.
Russian equity indexes will surge between 20 percent and 30 percent by the end of 2013 on higher earnings and dividend payouts, Vladimir Potapov, chief executive officer at VTB Capital Investment Management, said in an interview June 11. Crude oil, Russia’s chief export earner, traded near the highest level in more than three weeks at $96.56 a barrel in New York as U.S. retail sales increased the most in three months in May, while the number of jobless claims dropped last week, according to data yesterday.
“Good data in the world’s biggest economy has a positive impact on the investor sentiment toward the Russian market,” Vladimir Savov, an equities strategist at Otkritie Capital in Moscow, said by phone. “We’re bouncing back today.”
The dollar-denominated RTS Index, which entered a bear market last week, rose 1.2 percent to 1,277.31. Urals crude, Russia’s main export blend, surged 1.5 percent to $104.26.
On the Micex, 35 stocks increased while 15 dropped. The volume of shares traded on the gauge was 37 percent below the 30-day average, while 10-day price swings rose to 21.496.
Bank Rossii held its refinancing rate at 8.25 percent on June 10. That matched the median estimate in a Bloomberg survey of 26 economists, with four predicting a quarter percentage point cut. Inflation in Russia accelerated for a second month in May to the fastest pace in 21 months, according to data last week.
This week’s central bank meeting was the last scheduled rate gathering before Kremlin economic aide Elvira Nabiullina takes over June 24 as chairman. The Economy Ministry lowered this year’s growth forecast to 2.4 percent from 3.6 percent in April.
“We’re expecting a rate cut next month,” Savov said. “If we don’t see one, it’ll have a negative effect on the market.”
The world economy will expand 2.2 percent, less than a January forecast for 2.4 percent growth and slower than last year’s 2.3 percent, the World Bank said in a report on June 12. It lowered its prediction for developing economies and sees the euro region’s gross domestic product shrinking 0.6 percent.
The Micex tumbled the most in a year on May 23, the day after Federal Reserve Chairman Ben S. Bernanke suggested the central bank could curtail its bond buying if the job market improves in a “real and sustainable way.” The Fed buys $85 billion of debt a month to support the economy by putting downward pressure on interest rates.
The Standard & Poor’s GSCI gauge of 24 raw materials was little changed at 626.16. OAO Alrosa, a diamond producer, increased 2.2 percent to 33.72 rubles, the biggest advancer. OAO Mechel (MTLR)’s preferred shares added 1.7 percent to 54.45 rubles.
Eleven companies out of 50 on the Micex closed yesterday at 52-week lows, while no companies closed at 52-week highs, according to data compiled by Bloomberg. Eleven stocks, or 22 percent, were trading above their 50-day moving average.
The country’s equities have the cheapest valuations among 21 emerging markets tracked by Bloomberg. The Micex trades at 4.8 times its 12-month estimated earnings, having lost 13 percent this year, compared with a multiple of 9.8 for the MSCI Emerging Markets Index (RTSI$), which is down 9.5 percent.
The Russian Volatility Index tumbled 3.3 percent to 31.93. The Bloomberg Russia-US Equity Index of the most-traded Russian companies in the U.S. increased 1 percent to 84.79 yesterday.
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