Polyus Salvaged to VTB as Technical Level Hit: Russia Overnight
Polyus Gold International Ltd. (PLZLY), the worst performer among the most-traded Russian stocks in the U.S. this year, drew five times its daily average of trades as VTB Capital said the stock is poised to recoup losses.
Global depositary receipts of Polyus, Russia’s top producer of gold, rose 1.3 percent to $3.07 in New York yesterday, its first advance in 10 days on volume five times the daily average over the past three months. The stock rebounded after its 14-day relative strength index fell to 29.2 Jan. 14, below the 30 level that signals a drop has been excessive and may reverse. The last time the RSI was below 30, on Aug. 15, Polyus jumped 12 percent the next month.
“Polyus has been lagging behind and has a lot of catching up to do,” Nikolay Sosnovskiy, a metals analyst at VTB Capital, a unit of Russia’s second-largest bank, said by phone from Moscow yesterday.
Sosnovskiy is predicting Polyus will advance 49 percent in London, after retreating more than 5 percent there and in New York this year. The shares fell as billionaire Mikhail Prokhorov said in September that he wanted to sell all or part of his stake and as concern grew over mine delays. Futures on Moscow’s RTS stock index added 0.2 percent to 157,860 in U.S. hours, while the Bloomberg Russia-US Equity Index of Russian equities in the U.S. fell 0.2 percent to 101.18.
Polyus traded at 11.2 times estimated earnings in New York yesterday, rising from a four-month low of 11 times reached Jan. 14. The London-based company also rose in London, where the stock climbed 1.6 percent to 194 pence, or $3.12, the biggest gain since Dec. 21. Trading volume rose to 139 percent of the three-month average, data compiled by Bloomberg show.
Shares of the Moscow-based company traded on Russia’s Micex Index fell for a third day, declining 0.5 percent to 983.30 rubles, or the equivalent of $32.49 yesterday.
VTB’s Sosnovskiy has a 290 pence price target on Polyus’ London-listed shares, indicating expectations of a 50 percent advance over the next 12 months. He rates the London-listed stock buy and the Micex-traded shares hold.
Shares are set to surge as much as 30 percent in 2013 as gold prices extend gains and the company boosts output, Ilya Kravets, who helps manage $100 million of assets at Daniloff Capital LLC in New York including Polyus stock, said.
“Polyus is fundamentally undervalued and has a huge potential for growth,” Kravets said by phone in New York yesterday. “As developed economics implement stimulus measures, gold will rise, fueling increase” in gold miners’ stocks including Polyus.
Polyus reiterated its 2012 production target of 1.6 million ounces in October, even after third-quarter sales fell 3 percent.
Shares of the company may fall as low as 179.75 pence in London “within one week to one month” before it rebounds, Philippe Delabarre, analyst at Trading Central investment research company in Paris, said by phone yesterday.
Prokhorov’s Onexim Holdings Ltd. is looking to sell some or all of its 37.8 percent stake in Polyus, according to a Sept. 12 statement. Billionaire Suleiman Kerimov’s Nafta Moskva, which holds 40.2 percent of Polyus, said at the time it isn’t planning to acquire shares.
The Market Vectors Russia ETF (RSX), the biggest U.S.-traded exchange-traded fund that holds Russian shares, declined 0.8 percent to $29.9 yesterday, falling for the second time in three days. The RTS Volatility Index, which measures expected swings in the index futures, dropped 2.9 percent to 20.48.
Oil, which along with natural gas contributes about 50 percent of Russian government revenue, slipped 0.9 percent to $93.28 a barrel in New York yesterday, declining from the highest level in four months above the 100-day average.
Brent oil for February settlement decreased 1.4 percent to $110.3 a barrel on the London-based ICE Futures Europe exchange yesterday. Urals crude, Russia’s chief export blend, retreated 1.1 percent to $108.76.
The ruble weakened 0.3 percent to 30.3475 per dollar yesterday. It rallied 0.4 percent to 40.2975 per euro, leaving the ruble little changed at 34.8250 versus the dollar-euro basket used by the central bank to manage the currency. Ruble futures showed the currency weakening 0.2 percent to 30.640 per dollar in New York yesterday.
The Standard & Poor’s GSCI Spot Index of 24 commodities slipped 0.5 percent to 652.18 yesterday.
United Co. Rusal, the world’s largest aluminum producer, dropped 2.6 percent to HK$4.88 in Hong Kong trading as of 11:06 a.m. local time. The MSCI Asia Pacific Index fell 0.3 percent.
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