Surgut Premium Widens on Brent’s Five-Day Gain
OAO Surgutneftegas (SGTPY) climbed in New York to trade at the biggest premium versus Moscow shares in two weeks and Russian futures rallied as a pledge by Federal Reserve Chairman Ben S. Bernanke to stimulate growth sent Brent higher.
American depositary receipts of Surgut, as Russia’s fourth- largest oil producer is known, jumped yesterday to the highest level since May 4, trading 3.6 percent higher than the shares in Moscow. Futures expiring in September on the dollar-denominated RTS index (RTSI$) gained 1.1 percent to 138,940 as the Bloomberg Russia- US 14 Index (RUS14BN) of the most traded Russian companies in New York rose for a third day. CTC Media Inc. (CTCM) surged the most in two months after the company said it began broadcasting in Asia.
Brent, the grade that underpins prices for Russia’s Urals export blend, capped the longest stretch of gains since February after Bernanke told U.S. lawmakers the central bank is ready to take further action to support an economic recovery. 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.
“Russian stocks and oil are benefiting from the belief that the Fed will undertake another round of quantitative easing,” Ian Hague, who helps oversee $1.3 billion as a partner at Firebird Management LLC, said by phone yesterday in New York. “The price of oil will continue to be weighed by concerns over global growth, so any evidence that growth is reviving will be very supportive.”
The Market Vectors Russia ETF (RSX), the biggest U.S.-traded fund that holds Russian shares, advanced for a third day, adding 1.6 percent to $26.90. The RTS Volatility Index, which measures expected swings in the index futures, rose for the second day in three, adding 1.8 percent to 31.20 points. The Bloomberg Russia- US 14 Index increased 1 percent to 90.84.
Bernanke spoke in Washington after data made public on July 16 showed that U.S. retail sales contracted in June. The Fed will consider asset purchases as well as interest-rate reductions to spur growth in the world’s largest economy, he said.
Chinese authorities may also announce measures to support their economy after the International Monetary Fund cut on July 16 its forecast for China’s growth this year to 8 percent from 8.2 percent three months ago.
‘Behind the Curve’
“Investors are looking for signs that bankers are ahead of the curve instead of behind the curve,” Bruce Bower, a partner at Moscow-based hedge fund Verno Capital, which manages more than $200 million in Russia, said by phone yesterday. “Any moves to loosen monetary policy shows that banks are being aggressive, which is a real positive.”
Surgut gained 3.2 percent to $6.11. Shares in Moscow fell 0.7 percent to 19.14 rubles, or 59 U.S. cents yesterday. One ADR equals to 10 common shares.
OAO Gazprom Neft (GZPFY), the oil arm of Russia’s gas export monopoly, jumped 2.4 percent to $23.94, an 11-week high, after shares in Moscow gained 1.8 percent to 155.06 rubles, or the equivalent of $4.78. One ADR equals five ordinary shares.
“The biggest component for Russia is the price of oil and global risk appetite, and both have been favorable lately,” Bower said.
Crude for August delivery rose 0.9 percent to settle at $89.22 a barrel on the New York Mercantile Exchange. Crude was supported by a forecast that U.S. oil supplies probably fell in the week ended July 13 as refineries processed more crude into gasoline, a Bloomberg survey showed.
Brent oil for September settlement advanced for a fifth day, climbing 0.6 percent to $104 a barrel on the London-based ICE Futures Europe exchange. Urals crude was little changed at $104.40.
CTC Media climbed the most since May 3, adding 2.5 percent to $7.69. The Moscow-based broadcaster said it signed an agreement with Thai Media Export Co. to begin operating CTC- International in Phuket, Thailand.
OAO Gazprom (OGZPY), the world’s biggest natural gas exporter, gained 1.8 percent to $9.54 after Troika reiterated its buy recommendation on the stock. Gazprom shares in Moscow rose 0.8 percent to 154.96 rubles, or the equivalent of $4.78. One ADR represents two ordinary shares.
The RTS Index in Moscow advanced for a fourth day, rising 0.4 percent to 1,387.61 while the 30-stock Micex (INDEXCF) Index gained 0.6 percent to 1,430.17, its highest since July 5.
The Micex has gained 2 percent in 2012 and trades at 5.3 times analysts’ earnings estimates for companies in the index. That compares with a 5 percent decline for Brazil’s Bovespa (IBOV) gauge, which trades at 10 times estimated earnings, according to data compiled by Bloomberg. The Shanghai Composite Index (SHCOMP) trades at 9.6 times estimated earnings, and the BSE India Sensitive Index (SENSEX) has a ratio of 13.4.
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