China Stimulus Bets Spur Rally Led by RusHydro: Russia Overnight

Russian stock-index futures rose and the nation’s equities traded in the U.S. posted the longest string of weekly gains since March, on prospects new stimulus measures in China will boost demand for commodities.

Futures expiring in September on the dollar-denominated RTS index added 0.3 percent to 136,475 on July 13. The Bloomberg Russia-US Equity Index (RUS14BN) of the most-traded Russian companies in New York rose 0.7 percent to 89.56, bringing last week’s advance to 0.6 percent. OAO RusHydro (RSHYY), the nation’s biggest hydropower company, had the largest weekly gain in five weeks while OAO Surgutneftegas (SGTPY), Russia’s fourth-largest oil producer, climbed to the highest level since July 5.

Oil rose in New York last week and commodities climbed to the highest level in two months as slowing growth in China fueled speculation of more stimulus measures. Russia, the world’s biggest energy producer and the largest exporter of nickel and palladium, said China accounted for about 10 percent of the country’s foreign trade in the first four months of 2012.

“Once approved, Chinese stimulus measures will lead to a growing appetite for commodities,” Slava Smolyaninov, chief strategist at UralSib Capital in Moscow, said by phone on July 13. Russian stocks benefit from a growing demand as “oil is very important for the budget and to the ruble,” he said.

The Market Vectors Russia ETF (RSX), the biggest U.S.-traded exchange-traded fund that holds Russian shares, rose 1.7 percent to $26.33 on July 13. The RTS Volatility Index, which measures expected swings in the index futures, fell 5.3 percent to 31.71.

Risky Assets

China’s economic expansion slowed for a sixth quarter, growing at 7.6 percent in the April-June period, data from the National Bureau of Statistics showed last week. That compares with an 8.1 percent gain in the previous quarter period and the 7.7 percent median forecast of economists. Industrial production increased at a slower pace in June while retail sales growth decelerated.

Premier Wen Jiabao said last week China will focus on promoting investment growth in order to stabilize economic expansion. Wen said the government will step up policy fine- tuning in the second half of the year to support growth, the official Xinhua News Agency reported yesterday.

“Stimulus measures fuel appetite for all kinds of risky assets, you name it: energy, raw materials,” Smolyaninov said. “The rally may quickly fade, because investors’ focus will then switch to see whether the measures work and actually help sustain growth.”

United Co. Rusal (486), the world’s largest aluminum producer, dropped 1.4 percent to HK$4.21 in Hong Kong trading as of 10:37 a.m. local time. The MSCI Asia Pacific Index gained 0.2 percent today amid speculation China will take more steps to bolster its economy.

RusHydro Gains

American depositary receipts of Moscow-based RusHydro jumped 6.4 percent to $2.58. RusHydro climbed 1.6 percent to 85.86 kopeks, or 2.64 U.S. cents, in Moscow on July 13. One depositary receipt equals 100 Moscow-listed shares.

American depositary receipts of Surgutneftegas rose 1 percent to $5.93 in new York on July 13. The stock gained 1 percent in Moscow to 19.162 rubles, or 59 U.S. cents. One ADR is equal to 10 Moscow-listed shares.

Russia, the world’s largest oil producer outside of the Organization of Petroleum Exporting Countries, received about half of its 2011 budget revenue from sales of oil and natural gas, according to government data.

China is the world’s second-biggest oil consumer after the U.S., using 9.76 million barrels a day in 2011, according to BP Statistical Review of World Energy.

Russia-China Trade

Russia’s trade with China reached $27.4 billion in the January-to-April period, nearly 10 percent of the $269.5 billion in exports and imports, according to Russia’s Federal Service of State Statistics.

CTC Media Inc. (CTCM), the Nasdaq-listed Russian television company, advanced for the first time in 12 weeks, ending the longest decline since the stock was listed in New York in 2006. Deutsche Bank AG recommended investors buy CTC Media shares, according to a July 12 report, revising its earlier recommendation to hold the stock.

Oil for August delivery rose 1.2 percent to $87.10 a barrel on the New York Mercantile Exchange on July 13, for a weekly gain of 3.1 percent. Prices have fallen 12 percent this year.

Brent for August settlement added 1.3 percent to $102.40 a barrel on the London-based ICE Futures Europe exchange. Urals crude, Russia’s main export blend, increased 2.1 percent to $102.13 per barrel on July 13, gaining for third consecutive week. Urals ended the week above $100 per barrel for the first time since the five days to May 25.

Oil may fall this week on concern weaker economic growth may reduce fuel demand, a Bloomberg survey showed. Fourteen of 34 analysts, or 41 percent, forecast crude will drop through July 20. Twelve respondents, or 35 percent, predicted that futures will rise and eight said there will be little change in prices.

The Standard & Poor’s GSCI Spot Index gained 1 percent to 621.190 on July 13.

To contact the reporter on this story: Halia Pavliva in New York at hpavliva@bloomberg.net

To contact the editor responsible for this story: Tal Barak Harif at tbarak@bloomberg.net;

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