Sberbank Shares Advance on Bet Earnings to Beat Estimates

OAO Sberbank (SBRCY) rose to a two-week high in New York on speculation that second-quarter earnings will be strong enough to prompt the Russian government to sell its stake in the country’s largest lender.

Moscow-based Sberbank added 1.6 percent to the highest since Aug. 10. Russian equity futures expiring in September on the dollar-denominated RTS index fell 0.2 percent and the Bloomberg Russia-US 14 Index (RUS14BN) of the most traded Russian companies in New York dropped to a one-week low. OAO Mobile TeleSystems (MBT) slipped after taking a $1.08 billion writedown against its operations in Uzbekistan.

Sberbank is scheduled to report earnings today as the government assesses when to sell a 7.6 percent stake in eastern Europe’s largest lender, part of a wider asset sales program. The government has targeted September as a date to reduce its 57.6 percent stake in the bank, a person with knowledge of the matter said in May. Investors are eager for the privatization program to take place because it would reduce the government’s ownership in its equity market, said Julian Rimmer of CF Global Trading.

“If they want to do a big offering sometime soon, you have to make sure the news flow is positive,” Rimmer said in a phone interview yesterday. “In addition to its dependence on oil price, Russia’s problem is the fact that the state owns too much of the market. Fund managers will always penalize stocks, sectors or markets that have heavy state involvement, so it would be positive if they could sell the Sberbank stake.”

Russia ETF Slides

The Market Vectors Russia ETF (RSX), the largest exchange-traded fund of Russian shares, fell for a second day, losing 0.6 percent to $27.59. The RTS Volatility Index, which measures expected swings in the index futures, dropped for the third time in four days, retreating 0.5 percent to 30.34.

Sberbank is expected to report adjusted earnings per share for the second quarter of 10 cents, according to the mean estimate of three analysts surveyed by Bloomberg. Sales for the period are expected to be $7 billion, according to the mean estimate of five analysts.

The Russian government controls Sberbank via its central bank, or Bank Rossii, whose first deputy chairman, Alexei Ulyukayev, said in January that it wanted Sberbank’s stock price to get “closer to 100 rubles” before it offered shares. The stock rose 1.8 percent yesterday in Moscow to close at 94.52 rubles, or the equivalent of $2.96. One ADR represents four ordinary shares.

“There is some expectation that Sberbank could come out with a good set of numbers ahead of a potential placement,” said Ronny Rehn, an analyst at Keefe, Bruyette & Woods in London. “For Sberbank, a placement is very important because there’s been a massive overhang on the stock. This placement has been around for a long time now.”

Crude Advances

Rehn has an outperform rating on Sberbank with a 12-month price target on its Moscow shares of 118 rubles.

RTS index futures fell 0.2 percent to 142,470 yesterday and the Bloomberg Russia-US 14 gauge dropped 0.3 percent to 93.71.

Oil for October delivery increased 0.9 percent to settle at $96.33 a barrel on the New York Mercantile Exchange as Hurricane Isaac cut offshore output in the Gulf of Mexico. Brent oil for October settlement rose 0.3 percent to $112.58 a barrel on the London-based ICE Futures Europe exchange.

Isaac’s center was 55 miles (85 kilometers) south-southeast of the mouth of the Mississippi River, the National Hurricane Center said in an advisory at 2 p.m. New York time. Isaac was moving northwest at 10 miles per hour with top winds of 75 mph.

Urals crude, Russia’s major export oil blend, rose for the first time in four days, gaining 0.1 percent to $111.85.

MTS Writedown

MTS, as Russia’s largest mobile-phone operator is known, fell 0.3 percent to $18.23 as it took a writedown against its operations in Uzbekistan after the nation’s authorities removed its license. MTS invested about $1.5 billion in the Uzbek unit, Joshua Tulgan, the company’s director of investment relations said on Aug. 22. The Moscow-based company reported a net loss of $682 million.

MTS shares in Moscow gained 3.3 percent to 244.70 rubles, or $7.65. One ADR represents two ordinary shares.

“Operationally, the MTS numbers were absolutely sound but the discrepancy on net income came from the writedown,” Rimmer said. “I think people will see through this one quarterly hiccup because investors still like high yielding stocks with fairly reliable income streams.”

OAO Mechel (MTL), Russia’s biggest coking coal miner, fell for a fifth day, losing 4.5 percent to $5.77, the lowest since July 26. Shares in Moscow retreated 2.9 percent to 191.90 rubles, or the equivalent of $6.

Micex Gains

The 30-stock Micex (INDEXCF) Index rose 0.2 percent to 1,450.81, its third advance in four days.

The gauge has gained 3.5 percent in 2012 and trades at 5.4 times analysts’ earnings estimates for member companies, the lowest of the 21 emerging markets tracked by Bloomberg. That compares with a 2.9 percent advance this year for Brazil’s Bovespa (IBOV) index, which trades at 11.8 times estimated earnings, according to data compiled by Bloomberg. The Shanghai Composite Index (SHCOMP) trades at 9.3 times estimated earnings and the BSE India Sensitive Index (SENSEX) has a ratio of 13.8.

United Co. Rusal, the world’s largest aluminum producer, gained 0.5 percent to HK$4.32 in Hong Kong trading as of 11:01 a.m. local time. The MSCI Asia Pacific Index added 0.2 percent today as investors await a report on U.S. economic growth and Federal Reserve Chairman Ben S. Bernanke’s speech on monetary policy this week.

To contact the reporter on this story: Leon Lazaroff in New York at llazaroff@bloomberg.net

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

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