Russian equities climbed the most in two weeks as Cyprus agreed on an international bailout, boosting crude oil, the country’s main export earner.
The Micex Index (INDEXCF) gained as much as 1.2 percent, the most since March 11, and traded 0.7 percent up at 1,450.82 by 2:37 p.m. in Moscow. OAO Sberbank, the nation’s largest lender, added 1.3 percent, while VTB Group increased 0.8 percent, snapping two days of declines. The dollar-denominated RTS Index (RTSI$) jumped 1.1 percent to 1,487.24.
Cyprus agreed to the outlines of an aid package, paving the way for 10 billion euros ($13 billion) of emergency loans to stave off the threat of default. Crude traded up 0.5 percent at $94.16 per barrel in New York. Oil and gas contribute about 50 percent of Russia’s state revenue. OAO Rosneft, Russia’s largest oil producer, added 2.1 percent.
“The Cyprus situation has started to get resolved,” Victor Markov, an analyst at Kapital Asset Management LLC, said by phone from Moscow. “There was a lot of uncertainty regarding the future of banks, now uncertainty is gone. Oil is trading at high levels, this is positive for Russia.”
Russian lenders and companies had about $31 billion placed in Cypriot banks or their own units at the end of 2012, according to a March 13 report from Moody’s. Bank loans to Cypriot companies of Russian origin created at least $30 billion in further exposure, the ratings company said.
The Micex retreated 3.6 percent last week as Cyprus -- Russia’s biggest direct investor because of a dual tax-avoidance treaty -- proposed a levy on savings accounts that was later rejected by lawmakers. The Bloomberg Russia-US Equity Index (RUS14BN) of the most-traded Russian stocks listed in the U.S. fell 2.6 percent last week. The Russian Depositary Index of companies rallied 1.2 percent today, as OAO Gazprom and Sberbank both climbed 1.9 percent.
“The market underperformed last week against developed and emerging markets because it became clear that larger depositors will need to take a bigger hit,” Peter Szopo, head of research at Alfa Bank in Moscow, said by e-mail. “For the Russian economy overall, the event however is not such a disaster and at the same time Eurozone risks will be receding for a while, supporting more risky assets like emerging market equities.”
The Moscow Exchange, which is modernizing to lure more foreign investors, debuted two-day, or T+2, settlement for sovereign debt and 15 of the more than 1,000 equities today, bringing it into line with markets such as the U.S. and Brazil. The entire exchange will shift to T+2 by Jan. 1 next year, Deputy Chief Executive Officer Andrey Shemetov said by e-mail on March 22. The bourse shares added 0.9 percent to 52.03 rubles, the first advance in three days.
Russian companies from Gazprom to OAO Mobile TeleSystems also list stock in London and New York as foreigners are deterred by rules requiring Moscow trading accounts to be set up through local custodians. While Euroclear Bank SA, Europe’s largest settlement agency, started working with Russian government bonds last month, stocks won’t be accessible on the bank’s international platform until July 2014.
The RTS Volatility Index, which measures expected swings in the index futures, tumbled 3.4 percent today to 20.57.
The Micex trades at about 5.4 times estimated earnings and has lost 1.6 percent this year. That compares with a multiple of 10.5 times for the MSCI Emerging Markets Index, which dropped 2.8 percent over the same period.
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