Russia Stocks Rise to March High as Oil Gains, Volatility Falls

Russian (INDEXCF) equities advanced to the highest level since March as oil, the nation’s chief export, increased on signs of a global economic recovery. The benchmark stock gauge had the smallest price swings this year.

The Micex Index added 1.2 percent to 1,562.93 by the close in Moscow, the highest level since March 26. The dollar- denominated RTS Index (RTSI$) rose 1 percent to 1,635.50. OAO Sberbank, the nation’s largest lender, jumped 3.2 percent, the strongest close since July 7. OAO Surgutneftegas, an oil producer, increased 6 percent, the most since Feb. 24. The Micex’s 10-day volatility declined to 11.071, the lowest level since Dec. 28.

Crude oil gained 0.6 percent to $96.42 in New York, trading near its highest in four months, on speculation a global economic recovery will boost fuel demand. Russia receives about half of its budget revenue from oil and natural gas. Chinese industrial companies’ profits rose for a fourth month in December, the National Bureau of Statistics in Beijing said yesterday.

“Optimism in the global markets” is lifting Russian stocks,Sergey Kucherenko, who manages about $50 million in Russian equities at Nomos Bank in Moscow, said by phone.

The European Central Bank said lenders will this week repay more of its emergency three-year loans than economists forecast, in another sign the euro region’s debt crisis may be abating. The U.S. House last week voted to temporarily suspend the nation’s borrowing limit, removing the debt ceiling for now as a tool for seeking deeper spending cuts.

“The U.S. is trying to manage its debt ceiling problems, Europe seems to have a grip on its issues,” Kucherenko said.

The relative strength index for Sberbank shares was at 77.5, indicating the shares may fall. An indicator above 70 means the shares have been overbought, while a value below 30 signals a stock has been oversold.

Polyus, RusHydro

Polyus Gold International Ltd. rose for a third day, climbing 1.5 percent to 224.75 pence in London trading. The shares of its Moscow-listed unit jumped as much as 5.6 percent. The amount of shares traded in Moscow was 124,409, equivalent to about 4.6 times the three-month average. Refined gold output rose 12 percent last year, beating estimates, the company said in a statement today.

OAO RusHydro, Russia’s biggest renewable energy producer, added 1 percent to 79.20 kopeks, the highest level since Oct. 24. The company’s power generation rose 5 percent last year from a year earlier, RusHydro said today.

The number of shares traded on the Micex was 24 percent below the gauge’s 10-day average, data compiled by Bloomberg show.

Pension Fund

Standard & Poor’s GSCI Index of commodities was little changed at 663.26. Tin retreated in London, while lead, nickel and copper climbed.

President Vladimir Putin said last week there should be no restrictions on Russians investing in initial public offerings of shares and state asset sales should happen mainly on Russian exchanges.

About 1 percent of Russia’s 143 million population participate in the financial market, while pension fund investments account for around 4.5 percent of the nation’s gross domestic product, Putin said at his residence in Novo-Ogarevo, according to a transcript on the Kremlin website on Jan. 25.

The Market Vectors Russia ETF (RSX), the largest dedicated Russian exchange-traded fund, added 1.9 percent to $30.95 last week, the highest level since Sept. 14. The RTS Volatility Index, which measures expected swings in the stock futures, declined 0.3 percent to 19.84.

The Micex trades at about 5.8 times estimated earnings and has added 6 percent this year. That compares with a multiple of 10.9 times for the MSCI Emerging Markets Index, which has gained 0.7 percent over the same period.

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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