Russian equities in New York rose as investors purchased shares from the world’s cheapest emerging market and oil capped a third year of gains, trimming a 2011 decline for the Bloomberg Russia-US 14 Index (RUS14BN).
The index of Russian companies traded in New York added 0.7 percent to 90.56 on Dec. 30, led by Polyus Gold International Ltd. (PLZLY), the country’s biggest gold producer. The gauge dropped 10 percent last year, its first annual loss since a 70 percent decline in 2008. Russia’s 30-stock Micex Index, trading at 5 times analysts’ earnings estimates for member companies, ended the year 17 percent lower. United Co. Rusal (486), the world’s largest aluminum producer, rose 0.6 percent to HK$4.95 in Hong Kong trading as of 11:32 a.m. local time.
Oil, Russia’s biggest export earner, advanced 8.2 percent last year on speculation a U.S. economic recovery will bolster demand and concern escalating tension in the Middle East may disrupt supplies. The Micex has lost 6.9 percent since parliamentary elections on Dec. 4 sparked the biggest anti- government protests in more than a decade. Prime Minister Vladimir Putin aims to win a first-round vote in a March presidential ballot.
“Oil’s strength has been Russia’s saving grace,” Michael Shaoul, chairman of Marketfield Asset Management in New York, which oversees $1 billion, said in a telephone interview. “Looking into 2012, shares will continue to get a discount because of concerns about the quality of local corporate governance and growing political instability. If oil drops from here, it’s only going to make a bad situation worse.”
Crude for February delivery retreated 0.8 percent to settle at $98.83 a barrel on the New York Mercantile Exchange Dec. 30 after surging 25 percent in the final quarter. The futures gained 1.4 percent in electronic trading today.
Brent oil for February settlement dropped 0.6 percent to $107.38 a barrel on the London-based ICE Futures Europe exchange, a 13 percent advance in 2011. Urals crude, Russia’s chief export blend, lost 1.3 percent to $105.69 on Dec. 30 for a 15 percent gain on the year.
The Standard & Poor’s GSCI Total Return Index (SPGSCITR) of commodities fell 0.1 percent to 4,885.30 on Dec. 30 as the gauge dropped 1.2 percent in 2011 on concern that the sovereign-debt crisis in Europe and a cooling Chinese economy will sap demand for raw materials.
Russia’s economy, which grew 4 percent in 2010, may have expanded as much as 4.5 percent in 2011 and gross domestic product may rise 3.7 percent this year, the government forecasts. Growth in the U.S., the world’s biggest economy, will quicken to 2.1 percent in 2012 from 1.8 percent in 2011, a Bloomberg survey of banks and securities companies shows. U.S. jobless-benefit applications over the past month fell to a three-year low, data showed Dec. 29, and a report this week is forecast to show that U.S. payrolls increased in December.
The RTS Index (RTSI$) in Moscow gained 1.2 percent on Dec. 30 to 1,381.87, 22 percent lower for the year. The Micex (INDEXCF), the cheapest among the 21 emerging markets tracked by Bloomberg, advanced 1.1 percent to finish 2011 at 1,402.23. The RTS Volatility Index (RTSVX), which measures expected swings in the index futures, fell 7.6 percent to 38.13 points, its lowest closing level since Aug. 5.
The Market Vectors Russia ETF (RSX), a U.S.-traded fund that holds Russian shares, advanced 1.6 percent to $26.65, paring its decline for 2011 to 30 percent.
Polyus Gold gained as futures rose for the first time in a week, leading a rally in precious metals on speculation that the lowest prices in five months will spur demand from jewelers and investors. Polyus shares traded in New York rose 2.8 percent to $2.95 on Dec. 30. Gold futures for February delivery climbed 1.7 percent to $1,566.80 an ounce on the Comex in New York, ending a six-session slump that was the longest since March 2009.
OAO Lukoil (LUKOY), Russia’s largest non-state oil producer, gained 1.2 percent to $53.20 after shares (LKOH) climbed 1.1 percent on the Micex to 1,703.30 rubles, or $53.01. One ADR represents one ordinary share.
OAO Gazprom (OGZPY), the world’s biggest natural gas exporter, rose 0.7 percent to $10.68 after shares (GAZP) in Moscow gained 0.5 percent to 171.37 rubles, or the equivalent of $5.33. One ADR represents two ordinary shares. The Moscow-traded shares lost 11 percent on the year while the ADR fell 16 percent.
OAO Gazprom Neft (GZPFY), the oil arm of Russia’s gas export monopoly, gained 0.3 percent on Dec. 30 to finish the year at $23.33, an 11 percent advance for the year, topping the Bloomberg Russia-US 14 Index. Gazprom Neft shares (SIBN) in Moscow fell 0.9 percent to 148.18 rubles, the equivalent of $4.59, and a 16 percent gain for the year.
Gazprom Neft, Surgutneftegas
All of the stocks on the index declined in 2011 except for Gazprom Neft and OAO Surgutneftegas (SGTPY), a Russian oil producer, which rose 0.6 percent last year to close at $5.09. Surgutneftegas shares (SNGSP) in Moscow gained 0.8 percent on Dec. 30 to 16.50 rubles, the equivalent of 51 cents. One ADR is equal to 10 ordinary shares.
The Micex’s 17 percent decline in 2011 compares with an 18 percent slide for Brazil’s Bovespa (IBOV) index, which trades at 9 times analyst estimated earnings, according to data compiled by Bloomberg. The Shanghai Composite Index (SHCOMP) dropped 22 percent last year and trades at 10.6 times estimated earnings while the BSE India Sensitive Index (SENSEX), down 25 percent in 2011, has a ratio of 13.5.
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