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Russian Equities Climb as Consumer, Power Grid Stocks Rally

Russian (INDEXCF) equities climbed for the first time in three days as consumer stocks rallied after reporting earnings and as power grid shares advanced.

The Micex Index increased 0.8 percent to 1,537.49 by the close in Moscow. Of the 50 stocks in the gauge, 37 advanced and 13 sank. The RTS Index (RTSI$), Russia’s dollar-denominated equity gauge, added 1 percent to 1,605.36. Consumer services shares were the biggest gainers among nine industry groups, rising 3.8 percent on average, while utilities added 1.6 percent.

Fourth-quarter sales at X5 Retail Group NV (FIVE), Russia’s largest food retailer by revenue, grew 8.6 percent from a year earlier. OAO Dixy Group, a Russian supermarket chain, reported 2012 sales climbed 21 percent to 147 billion rubles. Dixy rallied as much as 3.8 percent, while X5 added as much as 2.6 percent in London. OAO Magnit, Russia’s largest food retailer by market value,surged 4.5 percent to a record-high after falling for the first time in nine days yesterday.

“Russian company earnings, especially those of retailers, have been very positive, beating estimates,” Dmitry Mikhailov, who manages $130 million in assets at Renaissance Capital in Moscow, said by phone today. “After a slight paring of gains yesterday, Magnit has reached new heights today.”

U.S. President Barack Obama’s administration said it welcomes a move by House Republicans to vote today on lifting the nation’s debt ceiling through mid-May. Crude oil was little changed at $96.54 in New York. Russia receives about half of its budget revenue from oil and natural gas.

Retailer Earnings

Magnit’s fourth-quarter net income was 8.2 billion rubles ($271 million) versus 5.32 billion rubles in the year-earlier period, the Krasnodar-based retailer said in a statement yesterday. That beat the average estimate of 6.63 billion rubles of seven analysts in a Bloomberg survey.

Dixy’s retail sales last month increased 19 percent to 15.6 billion rubles, the company said in a statement. X5 Retail’s fourth-quarter sales climbed to 134.9 billion rubles.

Five of 26 companies on Russia’s Micex Index that reported third-quarter earnings beat analysts’ estimates by an average 2.7 percent, data compiled by Bloomberg show.

VTB Group’s 2012 net income rose 2.4 percent to 21.6 billion rubles under Russian accounting standards, RIA Novosti reported today. The shares climbed as much as 1.7 percent before closing up 0.1 percent at 5.94 kopeks. The volume of stocks traded was 58 billion, equivalent to about 2.1 times the three- month average.

Russia’s second-biggest lender may sell as much as $3 billion of new shares this year, its first offering since 2011, VTB’s Chief Executive Andrei Kostin said in a Bloomberg Television interview today at the World Economic Forum in Davos, Switzerland.

Russian Grids

Grid companies Federal Grid Co. and OAO MRSK Holding added 2 percent and 3.2 percent respectively. Deputy Prime Minister Arkady Dvorkovich said yesterday in Moscow that Russia will present details of their merger at the Davos forum.

President Vladimir Putin in November signed a decree transferring 79.55 percent of Federal Grid’s shares to MRSK Holding, the nation’s largest electricity distribution company, according to an e-mailed copy of the document. The merged company was renamed as Russian Grids or OAO Rossiskiye Seti, according to the document.

OAO Gazprom, Russia’s natural-gas export monopoly, pared gains, closing up 0.5 percent at 146.63 rubles. Russia may end the company’s monopoly on gas exports of natural gas as long as it makes economic sense, Prime Minister Dmitry Medvedev said today during an interview with Bloomberg News in Davos.

Volatility

Gazprom, the world’s biggest gas producer and supplier of a quarter of Europe’s gas, is the only Russian company permitted to export the fuel following legislation introduced by President Vladimir Putin in 2006. OAO Novatek, Russia’s second-largest producer, is seeking an exemption from the law to secure rights to export liquefied natural gas. Novatek rallied 2.3 percent to 341.44 rubles.

OAO GMKN Norilsk Nickel increased 1.8 percent to 6,089 rubles, the highest level since Oct. 28. Russian mining company Metalloinves is boosting its stake in Norilsk, Interfax reported, citing billionaire Alisher Usmanov.

The amount of shares traded on the Micex was 1.2 times above the 30-day average, data compiled by Bloomberg show. The Micex’s 10-day volatility dropped to 12.194, according to data compiled by Bloomberg.

Standard & Poor’s GSCI Index added 0.1 percent to 664.68. All metals but copper on the London Metal Exchange rose, including lead, zinc and nickel.

Industrial Production

Russia’s industrial production unexpectedly slowed last month. Output at factories, mines and utilities rose 1.4 percent from a year earlier, the slowest pace since April, compared with 1.9 percent in November, the Federal Statistics Service in Moscow said today in an e-mailed statement.

The gauge trades at about 5.7 times estimated earnings and has added 4.3 percent this year. That compares with a multiple of 11 times for the MSCI Emerging Markets Index, which has gained 2.1 percent this year.

Russian equities have the lowest valuations based on estimated earnings among 21 emerging markets tracked by Bloomberg.

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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