Yandex Leads Consumer Rally on Ruble Strength
Stock Chart for Yandex NV (YNDX)
Yandex NV (YNDX), Russia’s biggest Internet search engine, led gains in the nation’s consumer stocks traded in New York after the ruble rose to the highest level in two months versus the dollar. RTS futures climbed as crude rallied.
Yandex jumped 4.1 percent to $19.45 in New York yesterday, the highest level since July 5. OAO Mobile TeleSystems (MBT), Russia’s biggest mobile-phone operator, advanced to a two-month high while VimpelCom Ltd. (VIP), the world’s sixth-biggest cell phone company, capped the longest rally since February. Futures expiring in September on the dollar-denominated RTS index (RTSI$) were little changed at 140,765 as the Bloomberg Russia-US 14 Index (RUS14BN) of Russian companies traded in New York rose 1.5 percent to $92.07.
The ruble climbed 1.3 percent versus the dollar and strengthened for an eighth day against the central bank’s target dollar-euro basket, the longest stretch of gains since December 2010. The Russian currency rose as metals and oil, the nation’s biggest export earners, surged on speculation policy makers from China to the U.S. will act to boost their economies. Russia depends on revenue from oil and gas for 50 percent of its 2011 budget, according to the government.
“The big picture for Russia is that oil prices remain high and the government is spending money, which is broadly a constructive backdrop for equities,” Lewis Kaufman, portfolio manager of the Thornburg Developing World Fund who helps oversee $7 billion in emerging market assets, said in a phone interview from Santa Fe, New Mexico yesterday. A strong currency is “going to affect consumption and to the extent that consumer confidence remains high in Russia, Yandex is a way to participate in that.”
The Market Vectors Russia ETF (RSX), the biggest U.S.-traded fund that holds Russian shares, advanced to the highest level in two weeks, adding 1.6 percent to $27.20. The RTS Volatility Index, which measures expected swings in the index futures, rose for the first time in four days, increasing 0.7 percent to 30.03.
An increase in U.S. jobless claims and a decline in home purchases to an eight-month low heightened speculation the U.S. Federal Reserve will act to boost the world’s largest economy. Fed Chairman Ben S. Bernanke told a Senate committee on July 17 that policy makers are studying options for further easing.
China’s Premier Wen Jiabao will probably decide to cut banks’ reserve requirements and encourage lending as the cabinet meets to discuss efforts to revive growth, the swap market shows.
Crude for August delivery increased 3.1 percent to settle at $92.66 a barrel. The price has risen 10 percent in seven days of gains, the longest such streak since Feb. 24. Brent oil for September advanced 2.5 percent to settle at $107.80 a barrel on the London-based ICE Futures Europe exchange while Urals crude, Russia’s chief export blend, gained 2.4 percent to $108.22.
Yandex’s advance extended its rally to 17 percent since falling to a record low on June 14. Yandex has maintained its protest against Russian legislation imposing controls over the Internet. The Kremlin’s human rights council said on July 18 that the law may be used to limit access to information and block an “excessively broad” range of Internet resources.
Russian retail sales advanced 6.9 percent in June from a year ago as unemployment remained at 5.4 percent, and real wages advanced 12.9 percent, according to government data.
The ruble climbed to 31.8275 versus the dollar yesterday and capped the longest stretch of gains versus the central bank’s target dollar-euro basket, rising 1 percent to 35.2391.
American depositary receipts of MTS, as Mobile TeleSystems is known, rose 3.2 percent to $18.25, the highest since May 7, after shares in Moscow advanced 1 percent to 227.51 rubles, or $7.13. One ADR is the equivalent of two ordinary shares. VimpelCom gained for the fifth day, rising 3.1 percent to $8.72, its highest since May 24.
“Both of these stocks are sensitive to currency moves and are reacting in part to this move in the ruble,” said Tibor Bokor, an analyst at ING Bank NV in London. MTS obtained 91 percent of its operating income in the first quarter from Russia while VimpelCom received about 40 percent.
OAO GMK Norilsk Nickel (NILSY), world’s largest producer of nickel and palladium, gained the most in three weeks in New York as commodities posted their longest rally since February. Norilsk’s ADRs rose 2.3 percent to $16.03 after shares on the Micex added 0.9 to 5,137 rubles, or $160.40. One ADR represents a 10th of an ordinary share.
The Standard & Poor’s GSCI Spot Index of 24 raw materials climbed 2.3 percent to 654.73. Copper futures for September delivery gained for a second day, adding 1.7 percent to close at $3.5345 a pound on the Comex in New York.
The RTS Index in Moscow fell for the first time six days, declining 0.1 percent to 1,412.22, while the 30-stock Micex (INDEXCF) Index added 0.6 percent to 1,434.47, a two-week high.
The Standard & Poor’s 500 (SPX) Index advanced for a third day, rising 0.3 percent to 1,376.51 as International Business Machines Corp. (IBM), the biggest computer-services provider, and EBay Inc. (EBAY), the largest Internet marketplace, reported profits that beat forecasts.
The Micex has gained 2.3 percent in 2012 and trades at 5.3 time analysts’ earnings estimates for member companies. That compares with a 2.5 percent decline for Brazil’s Bovespa (IBOV) index, which trades at 10.4 times estimated earnings, according to data compiled by Bloomberg. The Shanghai Composite Index (SHCOMP) trades at 9.7 times estimated earnings, and the BSE India Sensitive Index (SENSEX) has a ratio of 13.5.
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