Russian Stocks Erase Gains as Novatek Slides After Earnings

Russian (INDEXCF) stocks reversed gains as OAO Novatek’s declined on lower-than-estimated profit outweighed better-than-expected U.S. jobs data.

The 50-stock Micex Index closed little changed at 1,491.73 with 25 stocks rising and 25 stocks falling. Novatek slipped 2.2 percent to 311.06 rubles, extending its streak of weekly decreases to six. Russian markets are closed tomorrow.

Novatek, a private Russia gas producer, reported 69.5 billion rubles ($2.3 billion) net income in 2012 compared with a 71.3 billion ruble average estimate from analysts surveyed by Bloomberg.

“The Micex sell-off into the close was driven almost by entirely by Novatek, whose fourth quarter results missed market expectations,” Joseph Dayan, head of markets at BCS Financial Group, said by e-mail.

The Micex got support from the U.S. stock market, where the Dow Jones index rose to another record high, as the number of people who filed for unemployment benefits fell to a six-week low, showing further improvement in the labor market.

Rosneft climbed for a fourth day, its longest streak of gains in more than a month, to 248.08 rubles. The company agreed to buy a 30 percent stake in an Exxon Mobil project for an undisclosed amount to explore 20 deep-water blocks in the Gulf of Mexico, according to an e-mailed statement yesterday.

Arctic Exploration

BP Plc is open to looking at future Arctic exploration with Rosneft, BP Chief Executive Officer Robert Dudley said in a Bloomberg TV interview.

The Market Vectors Russia ETF (RSX), the largest dedicated Russian exchange-traded fund, lost 0.3 percent by 7:28 p.m. in Moscow to $29.00. The RTS Volatility Index, which measures expected swings in the stock futures, decreased 0.6 percent to 20.18.

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

The Micex trades at about 5.6 times estimated earnings after gaining 1.5 percent this year. That compares with a multiple of 10.7 times for the MSCI Emerging Markets Index and an increase of 0.3 percent.

To contact the reporter on this story: Alex Nicholson in Moscow at anicholson6@bloomberg.net

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

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