The Micex has risen 4.9 percent this month, beating the MSCI Inc.’s Emerging Market Index (MXEF)’s 1.2 percent advance. The Micex’s 50-day volatility fell to 12.2311 today, the lowest in at least 10 years. Russian equities trade at 5.7 times estimated earnings, the smallest multiple among 21 emerging markets tracked by Bloomberg.
President Vladimir Putin’s government is seeking to boost the appeal of the local market before targeting a record $10 billion in state asset sales this year. Russia approved regulations in November requiring state companies to pay no less than 25 percent of their net income in dividends. The Micex’s 3.6 percent estimated dividend yield compares with 2.7 percent for the MSCI EM Index. The gap hit a nine-year high of 1.2 percentage points this month.
“Russia has underperformed many of its peers last year, people are starting to see that it’s too cheap,” Bruce Bower, a partner at Verno Capital in Moscow, which manages about $200 million, said by phone. “Dividend yields are in line with the global markets, investors see that Russia is actually not that bad to its minority shareholders. Low volatility means the market is in a steady up-trend, it’ll continue performing.”
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