Russia Stocks Gain as Oil Rises, Mechel Rallies on China Data

Russian equities rose as oil rallied, boosting appetite for stocks in the world’s biggest energy exporter. OAO Mechel (MTLR), the nation’s biggest coking coal producer, gained the most in three months after a report signaled manufacturing may expand faster this month in China.

The Micex Index increased 0.2 percent to 1,466.15 by the close in Moscow, with 18 stocks rising and 12 falling. The gauge advanced 1.7 percent in the week. OAO Rosneft, the country’s biggest oil company, added 2 percent, while United Co. Rusal, the world’s largest aluminum producer, jumped 1.1 percent. The benchmark measure rose four days out of five this week.

Oil, Russia’s chief export earner, increased 0.5 percent to $86.29 a barrel in New York. Mechel surged as much as 4.3 percent after a preliminary purchasing managers’ index for China showed a reading of 50.9, higher than a median estimate of 50.8 in a Bloomberg News survey. U.S. industrial production climbed 1.1 percent in November, the Federal Reserve reported today.

“We’ve seen positive manufacturing data out of China and oil is trading at a comfortable level for Russian investors,” Sergey Fundobny, head of research at Arbat Capital in Moscow, said by phone. “Good global PMI data has boosted appetite for riskier assets.”

Trading Volumes

The amount of shares traded on the Micex was 18 percent below the 30-day average, according to Bloomberg data.

Standard & Poor’s GSCI Index of commodities rose 0.4 percent to 634.11. The RTS Index (RTSI$) climbed less than 0.1 percent to 1,500.89.

“The main focus will be on flash PMI numbers across the globe, with strong numbers from China,” Slava Smolyaninov, an equity analyst at UralSib Financial Corp, wrote in an e-mailed report today.

EON Russia, a unit of Germany’s largest utility, gained 2.1 percent to 2.5527 rubles, the highest since Nov. 12. The stock rose for the biggest weekly advance on the index at 7.4 percent. The company may pay its “entire” 2012 net income as dividends, Interfax reported on Dec. 12, citing Ulf Backmeyer, deputy general director of finance, economics in Russia. Alfa Bank cited the company as its top sector pick on “healthy” dividend expectations, according to yesterday’s note.

Shares of AFK Sistema fell 0.6 percent to 24.779 rubles, posting a 1 percent drop in the week, the biggest on the index. The volume traded was 987,000, equivalent to about 59 percent of the three-month average.

Fund Outflows

Investors took out $115 million from Russia-dedicated funds in the week ended Dec. 12, according to Sberbank CIB’s note, which cited EPFR Global data.

Mechel jumped 4.1 percent to 204.50 rubles, the biggest advance since Sept. 14. The amount of shares traded was about 1.3 million, equivalent to 1.3 times the three-month average. The shares gained 6 percent in the week, the second-biggest advancer.

The Bloomberg Russia-US Equity Index (RUS14BN) declined 0.6 percent to 97.07 in New York yesterday. The Market Vectors Russia ETF (RSX), the largest dedicated Russian exchange-traded fund, fell 0.9 percent to $29.09, retreating for the first time in 12 days yesterday. The RTS Volatility Index, which measures expected swings in the stock futures, rose 4.3 percent to 23.61 points.

The Micex trades at about 5.6 times estimated earnings after adding 4.6 percent this year. That compares with a multiple of 10.6 times for the MSCI Emerging Markets Index, which has gained 13.7 percent.

Russian equities have the lowest valuations based on estimated earnings among 21 emerging markets tracked by Bloomberg. Russia receives about half of its budget revenue from oil and natural gas industry sales.

To contact the reporters on this story: Ksenia Galouchko in Moscow at kgalouchko1@bloomberg.net; Jason Corcoran in Moscow at jcorcoran13@bloomberg.net

To contact the editor responsible for this story: Frank Connelly at fconnelly@bloomberg.net

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