Russia stocks climbed after falling to a six-week low yesterday as the nation’s biggest lenders advanced after a Federal Reserve official said the U.S. central bank is committed to record stimulus measures.
The ruble-based Micex Index (INDEXCF) increased 1.2 percent to 1,352.81 by 10:57 a.m. in Moscow. The RTS Index (RTSI$) rose 1.4 percent to 1,337.94. OAO Sberbank, Russia’s biggest lender, jumped 1.6 percent to 100.27 rubles, the first gain in five days. VTB Group increased 2.9 percent to 4.81 kopeks.
The RTS Index plunged as much as 20 percent from this year’s high yesterday as manufacturing conditions in Russia deteriorated in May and Chinese manufacturing indexes showed small businesses struggling, damping the economy of the world’s second-biggest oil user. Financial stocks added 1.7 percent on average as the Fed Bank of Atlanta President Dennis Lockhart said recent data suggest the economy isn’t strong enough to justify a reduction in the central bank’s bond-buying program.
“Positive news from the U.S. is supporting our market and bank shares today,” Natalia Berezina, an analyst at UralSib Capital, said by phone from Moscow. “After a stretch of declines, banks are bouncing back.”
Russia’s economy will probably expand 2.3 percent in the second quarter, according to the median estimate of 9 economists in a Bloomberg survey. That’s less than the 2.5 percent forecast a month earlier.
The nation’s economy grew at the weakest pace since 2009 in the first quarter as the euro area’s longest recession hurt demand for commodity exports, federal data showed on May 17. Russia’s central bank kept its main interest rates on hold for an eighth month in May.
“We took quite a big fall yesterday, now we’re seeing a correction, we could rise as much as 5 percent,” Sergey Kucherenko, who manages about $50 million in Russian equities at Nomos Bank in Moscow, said by phone. “There are persisting concerns that the commodity growth cycle is over.”
Crude oil dropped 0.3 percent to $93.22 in New York after the biggest gain in a month.
The Micex tumbled the most in a year on May 23, the day after U.S. Federal Reserve Chairman Ben S. Bernanke said the central bank could reduce the pace of its asset purchases if officials see signs of sustained improvement in growth. The Fed buys $85 billion of debt a month to support the economy by putting downward pressure on interest rates.
The volume of shares traded on the Micex was 64 percent above the gauge’s 30-day average, while 10-day price swings subsided to 26.56.
Russian equities have the cheapest valuations among 21 emerging markets tracked by Bloomberg. The Micex trades at 5 times its 12-month estimated earnings and has dropped 8.1 percent this year, compared with a 10.2 multiple for the MSCI Emerging Markets Index, which has retreated 4.8 percent.
The Russian Volatility Index decreased 3.5 percent to 26.62. The Bloomberg Russia-US Equity Index of the most-traded Russian companies in the U.S. added 0.5 percent to 88.06 yesterday.
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