Russia Stocks to Gain 38% on ‘Modernization’ Plans
Russian stocks will surge next year, sending the RTS Index up 38 percent, as the country wins World Trade Organization membership and the government reduces control of the economy, according to Troika Dialog.
The RTS gauge will climb to 2,200 by the end of 2011, Kingsmill Bond, chief strategist at Troika Dialog in London, wrote in a research report today. OAO Gazprom, Russia’s natural- gas export monopoly, may rise 42 percent as the company ends its most “value-destructive” capital spending programs, Bond wrote.
“WTO accession should act as an anchor for long-term reform and increase the natural growth rate,” wrote Bond, who was voted the top Russian strategist last year. “The new privatization program marks the start of a long pull-back by the state. Rapprochement with the West will continue as Russia seeks support for modernization.”
Russia is seeking to raise 1.8 trillion rubles ($57.4 billion) over the next five years by selling stakes in companies including OAO Rosneft and OAO Sberbank, its biggest oil producer and lender, respectively. The country expects to complete negotiations on joining the WTO in the first half of next year, Deputy Economy Minister Andrei Klepach said in an interview in London yesterday.
The RTS index has climbed 13 percent this year through yesterday, compared with an 10.9 percent gain for the MSCI Emerging Markets Index. The RTS advanced 2.2 percent higher to 1,632.96 by the 6:45 p.m. close in Moscow today.
Bond predicted that 2011 will be “the year of Gazprom.” The world’s biggest gas producer currently trades at about four times earnings, compared to seven times for Rosneft, according to data compiled by Bloomberg.
Troika’s other top picks for next year include Russia’s largest mobile company, OAO Mobile TeleSystems and Sberbank.
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