Russian stock futures climbed and OAO GMK Norilsk Nickel (NILSY) rose for a fourth day in New York on speculation the Federal Reserve will approve monetary stimulus that will fuel demand for commodities.
The RTS stock-index futures added 0.3 percent to 135,020. The Bloomberg Russia-US Equity Index (RUS14BN) of the most-traded Russian companies listed in the U.S. gained 0.8 percent to 88.51 in New York yesterday. Norilsk, the world’s biggest nickel producer, and OAO Gazprom (OGZPY), the world’s biggest natural gas producer, jumped to one-month highs. OAO RusHydro (RSHYY) led declines after Kommersant reported that the country’s largest hydropower company may hold a secondary public offering.
Signs of faltering growth with inflation below a 2 percent target mean the Fed will announce new steps to boost the economy as soon as this week’s meeting, according to 12 of the 21 primary dealers who trade with the central bank. Russia, the world’s biggest energy exporter and the largest producer of nickel and palladium, got almost 50 percent of budget revenue from oil and gas sales last year.
“Investors expect new stimulus measures in U.S. and globally,” Andrey Tretelnikov, an analyst at Rye MAN & Gor Securities in Moscow, said by phone yesterday. “Russian stocks are very sensitive to such measures, or even expectations of the measures, because it spells out potential demand for oil, metals and commodities overall.”
Russia ETF Advances
The Market Vectors Russia ETF (RSX), a U.S.-traded fund that holds Russian shares, climbed 1.1 percent to $26.20, the highest since May 11. The RTS Volatility Index, which measures expected swings in the index futures, fell 1 percent to 36.32 points in New York.
The Fed will review new forecasts at its two-day meeting ending today as it contends with continuing financial stress in Europe and a U.S. unemployment rate that has remained above 8 percent for 40 consecutive months. JPMorgan Chase & Co. and Jefferies Group Inc. predict policy makers will extend the Fed’s so-called Operation Twist. The $400 billion program, which was announced in September, involved selling short-maturity debt and buying longer-term bonds.
Oil traded near a today high and commodities climbed to the highest level in seven days on the stimulus speculation.
Norilsk Nickel gained 1.6 percent to $16.45 in New York yesterday, the highest close since May 11. Vladimir Potanin’s Interros Holding, which controls 28 percent of Norilsk, asked Norilsk’s board to increase its stake, according to two people with knowledge of the request. The board meets on June 28.
Anton Muravyev, an Interros spokesman, declined to comment, as did Alisa Fialko, a Norilsk spokeswoman.
OAO Sberbank (SBRCY) rose 1.7 percent to $10.75 in New York yesterday, the highest level since May 16, reversing a discount to the bank’s Moscow-traded shares. Renaissance Capital said Sberbank is its top pick among Russian banking shares in an e- mailed report yesterday.
“As always in volatile times, we prefer liquid over less liquid stocks,” David Nangle and Svetlana Kovalskaya, analysts at Renaissance Capital, wrote in an e-mailed report yesterday from Moscow. “And of Russian banking blue-chip names, we prefer Sberbank.”
Nangle and Kovalskaya reiterated their recommendation investors buy Sberbank’s shares. They set a 12-month target price at $4.1 per common share and $3.3 per preferred share, according to the report.
OAO RusHydro, the nation’s largest hydropower producer, tumbled 3.7 percent to $2.58. Rosneftegaz may acquire RusHydro’s 40 percent stake in Irkutskenergo from Inter RAO UES through a subsidiary, Kommersant newspaper said yesterday, citing people familiar with the plan.
Rosneftegaz may then transfer the stake in Irkutskenergo and invest 85 billion rubles ($2.62 billion) for a 25.8 percent stake in RusHydro, for which the company would have to issue additional shares, Kommersant reported.
An e-mailed message after hours to Elena Vishnyakova, head of RusHydro’s press office based in Moscow, seeking comment on the Kommersant report, was not returned.
OAO Lukoil (LUKOY), Russia’s second-biggest oil producer after OAO Rosneft, advanced 0.8 percent to $54.12, the highest since May 15, and traded at a 0.2 percent premium to the company’s Moscow- listed shares.
Ilya Balabanovsky, an analyst at Renaissance Capital in London recommended investors buy Lukoil’s London-listed ADRs, compared with a previous recommendation to hold, according to a report yesterday which reiterated the 12-months price target at $75 per share.
Gazprom rose 1.5 percent to $9.72 in New York yesterday, the highest since May 11.
Oil for July delivery, which expires today, gained 0.9 percent to $84.03 a barrel on the New York Mercantile Exchange yesterday. The Standard & Poor’s GSCI Spot Index advanced 0.8 percent to 586.31.
Brent oil for August settlement declined 0.3 percent to $95.76 a barrel on the London-based ICE Futures Europe exchange yesterday. Urals crude, Russia’s chief export blend, slumped 0.3 percent to $94.07 yesterday, the lowest since Jan. 27.
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