Russian equities rebounded after the worst quarterly slump in a year as a gauge of manufacturing rose and metal producers rallied.
The 50-stock Micex Index (INDEXCF) added 0.4 percent to 1,336.17 by the close in Moscow, having fallen 7.5 percent last quarter, the biggest drop since the period ended June 2012. OAO Novolipetsk Steel increased 3.3 percent to 44.61 rubles, after slumping 12 percent last quarter. OAO Magnitogorsk Iron & Steel jumped 1.2 percent to 7.635 rubles, while OAO Severstal added 3.3 percent to 216.30 rubles, the most since May 28.
“Metal producers fell so much last quarter that they’re due for a rebound,” Sergey Fundobny, head of research at Arbat Capital, said by phone from Moscow.
Russia’s Purchasing Manager’s Index (RTSI$) increased to 51.7 in June from 50.4 in May, HSBC Holdings Plc said today in an e-mailed statement, citing data compiled by London-based Markit Economics. Improving sentiment among manufacturers may signal a turnaround is near for Russia’s industrial production, which shrank on an annual basis in May for the third time this year. Brent oil climbed 1.2 percent to $103.37 a barrel in London.
The U.S. Institute for Supply Management’s factory index climbed to a three-month high of 50.9 in June from 49 a month earlier, a report showed today. The median forecast of 85 economists surveyed by Bloomberg called for the measure to rise to 50.5.
Russian equities have the cheapest valuations among 21 emerging markets tracked by Bloomberg. Stocks slumped last quarter and the dollar-denominated RTS Index entered a bear market on June 5 amid concern the U.S. Federal Reserve will taper stimulus. The RTS added 0.1 percent to 1,276.85 today.
China’s official Purchasing Managers’ Index was at 50.1 in June, according to data from the National Bureau of Statistics and China Federation of Logistics and Purchasing. The reading matched the median estimate in a Bloomberg News survey.
Crude futures added 1.6 percent to $98.12 in New York. Russia receives about 50 percent of its budget revenue from the oil and natural-gas industry.
The volume of shares traded on the Micex was 56 percent below the 30-day average, while 10-day price swings dropped to 18.791, the lowest since June 6.
“The Russian market’s low valuation is not enough to serve as a trigger for buying,” Fundobny said. “Today is the first day of the quarter in the second half of the year, so investors are hesitant to make sharp moves.”
The nation’s economy grew 1.6 percent in the first three months, the slowest pace since 2009. Bank Rossii held its refinancing rate at 8.25 percent on June 10 after inflation accelerated for a second month in May to the fastest pace in 21 months.
OAO Bashneft’s preferred shares jumped as much as 7 percent, climbing 4.9 percent to 935.90 rubles, the biggest advancer on the Micex and the most since October 2012. Rosneft has “never held talks” on buying Bashneft from AFK Sistema, Chief Executive Officer Igor Sechin said today.
Bashneft lost 15 percent in two days after Vedomosti reported June 25 that Rosneft’s management had expressed interest in the company in meetings with investment bankers and consultants prior to Rosneft’s acquisition of TNK-BP this year.
Sistema slid 1 percent to 27.915 rubles today and 0.3 percent to $19.70 in London.
The Micex dropped 2 percent on June 20 following comments by U.S. Federal Reserve Chairman Ben S. Bernanke that the regulator will probably taper its bond buying later in 2013 and halt purchases around mid-2014 if the world’s largest economy performs in line with projections.
The Russian Volatility Index, which measures expected swings in RTS futures, declined 5.2 percent, dropping for a fifth day.
The 14-day relative strength index on the Micex rose to 51, up from 31 on June 13. The RSI measures how rapidly prices have advanced or dropped during a specified time period. Readings below 30 indicate it may be poised to rise.
Two stocks on the Micex closed on June 28 at a 52-week low and one at a one-year high, according to data compiled by Bloomberg. Twenty-five stocks, or 50 percent, were trading above their 50-day moving average.
The Micex trades at 5.1 times its 12-month estimated earnings, having lost about 9.4 percent this year, compared with a multiple of 9.8 for the MSCI Emerging Markets Index, which is down 11 percent. The Bloomberg Russia-US Equity Index of the most-traded Russian companies in the U.S. climbed 0.4 percent to 84.43 today.
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