Russia Stocks Set for 6-Week High as Bernanke Boosts Commodities
Russian equities rose, poised for a six-week high as financial shares gained and commodities climbed after the U.S. Federal Reserve said the world’s biggest economy will continue to need stimulus.
The benchmark Micex Index (INDEXCF) added 1.3 percent to 1,350.58 by 12:06 p.m. in Moscow, the highest since May 30 on a closing basis. The dollar-denominated RTS Index (RTSI$) rallied 2.2 percent to 1,302.68. The volume of shares traded on the Micex was 6.1 percent below the 30-day average. Bank stocks advanced 1.9 percent, with OAO Sberbank, the country’s biggest lender, jumping 2.1 percent.
Fed Chairman Ben S. Bernanke backed sustained stimulus in a speech yesterday, after minutes of the Fed’s June meeting showed officials want to see more signs of job growth before starting to scale back the $85 billion-a-month bond purchases. Brent oil gained 0.3 percent to $108.86 a barrel in London, while crude increased 0.5 percent to $107.08 in New York.
“We are seeing a reaction to the high oil price,” Ivan Manaenko, the head of research at Veles Capital, said by phone from Moscow. “Bernanke’s comments reassured investors and added optimism to the previously weak trading.”
The Micex slid 2 percent on June 20 after comments by Bernanke that the central bank may wind down its bond buying if the economy performs in line with projections.
Sberbank advanced 2.1 percent to 93.01 rubles, with its London stock adding 3 percent to $11.40. VTB Group, Russia’s second-biggest lender, rose 1.1 percent to 4.62 kopeks.
OAO Pharmstandard, Russia’s biggest drugmaker, tumbled 8.4 percent to 1,707.80 rubles. The shares have lost 23 percent since a July 8 shakeup in which the drugmaker said it offered $630 million for Bever Pharmaceutical Pte Ltd., without disclosing why, and announced the spin off of its own branded, non-prescription drugs business.
The company will offer to buy out shareholders who vote against a planned spinoff of its over-the-counter unit for 2,180 rubles a share, equivalent to $16.50 per GDR. The GDRs were trading at a 20 percent premium before the plan was announced.
Forty six stocks rose on the benchmark today, while four declined. Russian equities have the cheapest valuations among 21 emerging markets tracked by Bloomberg.
Global growth will be 3.1 percent this year, unchanged from the 2012 rate, and less than the 3.3 percent forecast in April, the International Monetary Fund said yesterday, trimming its prediction for this year a fifth consecutive time. The Micex gauge climbed to a five-week high on July 4 as European Central Bank President Mario Draghi pledged to keep interest rates low. Europe is Russia’s biggest trade partner.
Russia’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 last month. The overnight repo rate will be held at 5.5 percent when the central bank meets tomorrow, according to the median estimate of 20 economists surveyed by Bloomberg. Seven predict a cut of 25 basis points.
The 14-day relative strength index on the Micex rose to 54 from 49 yesterday. The RSI measures how rapidly prices have advanced or dropped during a specified time period and readings below 30 indicate a security may be poised to rise and above 70 to fall.
Twenty three stocks, or 46 percent, were trading above their 50-day moving average on the Micex yesterday. None closed yesterday at a 52-week low and one at a one-year high, according to data compiled by Bloomberg.
The Russian Volatility Index, which measures expected swings in RTS futures, tumbled 3 percent today. The Bloomberg Russia-US Equity Index of the most-traded Russian companies in the U.S. was little changed at 85.82 yesterday.
The Micex trades at 5.1 times its 12-month estimated earnings, compared with a multiple of 9.8 for the MSCI Emerging Markets Index.
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