Russia Stocks Rise to 2-Month High as Dividends Boost Norilsk

Russian equities gained as crude oil rose and OAO GMK Norilsk Nickel rallied after the miner announced its dividend policy.

The Micex Index added 0.2 percent to 1,469.53 by the close in Moscow, the highest since Oct. 22, with 13 stocks rising and 17 falling. The gauge fell as much as 0.5 percent earlier and advanced 1.7 percent last week. OAO Mechel (MTLR), the nation’s biggest coking-coal producer, surged as much as 3.7 percent.

Oil, Russia’s chief export earner, gained 0.6 percent to $87.21 a barrel in New York. Norilsk jumped after Chief Executive Officer Vladimir Potanin told reporters the company will pay 50 percent of annual earnings before interest, taxes, depreciation and amortization as dividends twice a year.

“Norilsk surged on the dividend news,” Mikhail Stiskin, an analyst at Sberbank CIB, said by phone from Moscow. “This is a very high amount.”

Potanin, 51, replaced Vladimir Strzhalkovsky, a statement from the company handed to reporters in Moscow today shows. Potanin selected Strzhalkovsky, 58, to run the company in 2008 as conflict with United Co. Rusal over the management of Norilsk began.

Norilsk jumped 3.7 percent to 5,573 rubles, the highest level since March 19. The volume of shares traded was twice the three-month average, according to data compiled by Bloomberg.

Deripaska, Abramovich

Rusal, controlled by billionaire Oleg Deripaska, and Potanin are settling a more than four-year battle over control of Moscow-based Norilsk by balancing their representatives on the board. As part of the accord, Roman Abramovich, the billionaire Chelsea Football Club owner, will control voting rights on a 20 percent stake to help quash shareholder disputes, the parties said in a statement last week.

Utilities lost 0.7 percent on average today after Deputy Prime Minister Arkady Dvorkovich signaled state asset sales in the industry may be smaller than investors anticipated. Dvorkovich told analysts on Dec. 14 that state asset-sale plans in the next two years are limited to selling stakes in one or two of OAO MRSK Holding’s regional units, according to Alfa Bank and Aton Capital LLC.

“Investors were expecting the start of a big privatization program, but instead we’re seeing the regulator increasingly tightening its grip,” Alexei Yazikov, an analyst at Aton Capital, said by phone. “In the long and the short term, the power shares aren’t interesting for investors.”

OAO Mosenergo retreated 1.4 percent, while OAO RusHydro lost 1.2 percent. Federal Grid Co. dropped 0.9 percent. MSCI Inc.’s Russia Utilities (MXRU0UT) Index declined 1.6 percent to 37.52, the most since Nov. 26.

RusHydro Shares

The amount of shares traded on the Micex was 23 percent below the 30-day average, according to Bloomberg data.

RusHydro fell to 73.76 kopeks. The board on Dec. 10 approved the sale of 110 billion shares at 1 ruble each, which will start on Dec. 19, according to a company statement. President Vladimir Putin last month signed a decree transferring 50 billion rubles from the budget to RusHydro in exchange for additional shares.

Former President Dmitry Medvedev pledged in June last year to relinquish government control of some of the biggest state companies, including MRSK’s subsidiaries and RusHydro, the country’s largest hydropower producer, saying it was time to reverse the policy of strengthening the state’s presence.

Standard & Poor’s GSCI Index of commodities rose 0.2 percent to 638.23. The RTS Index (RTSI$) dropped 0.6 percent to 1,491.21. The Russian Depositary Index retreated 0.1 percent.

Mechel gained 2.4 percent to 209.40 rubles, as a preliminary purchasing managers’ index showed manufacturing in China expanded at a faster pace this month.

Gas Demand

Russia’s industrial-production rose 1.9 percent from a year earlier, compared with 1.8 percent in October, the Federal Statistics Service said today in an e-mailed statement.

American depositary receipts of OAO Gazprom, Russia’s biggest company, added 0.3 percent on Dec. 14, as the stock’s 100-day volatility dropped to 28.38, the lowest reading since Jan. 31, 2011. Gazprom lost less than 0.1 percent to 139.13 rubles in Moscow today.

Gazprom supplies about 25 percent of Europe’s gas and is benefiting from soaring demand for heating in the region as a wave of cold Siberian air and above-normal snowfall send temperatures plummeting. The company, whose ADRs have slumped 16 percent in 2012, has seen an “unprecedented” surge in supplies to Europe, with exports reaching an all-time high of 550.1 million cubic meters a day on Dec. 13, Chief Executive Officer Alexey Miller said in an e-mailed statement at the end of last week.

Lowest Valuations

The Bloomberg Russia-US Equity Index (RUS14BN) added 0.1 percent to 97.20 in New York on Dec. 14. The Market Vectors Russia ETF (RSX), the largest dedicated Russian exchange-traded fund, rose 0.7 percent to $29.29.

The Micex trades at about 5.6 times estimated earnings after adding 4.8 percent this year. That compares with a multiple of 10.6 times for the MSCI Emerging Markets Index, which has gained 13.4 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 reporter on this story: Ksenia Galouchko in Moscow at kgalouchko1@bloomberg.net

To contact the editor responsible for this story: Wojciech Moskwa at wmoskwa@bloomberg.net

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