Russian shares climbed for a third day as OAO Sberbank, the country’s biggest lender, rose after the central bank eased borrowing costs.
The benchmark Micex Index (INDEXCF) advanced 0.2 percent to 1,401.40 by 4:46 p.m. in Moscow. The dollar-denominated RTS Index (RTSI$) added 0.2 percent to 1,351.51. Sberbank jumped 1.1 percent to 99.64 rubles.
While Bank Rossii kept its main rates unchanged on July 12 it introduced a one-year floating-rate facility with a starting cost of 5.75 percent, compared with its 7.5 percent fixed-rate for similar-maturity loans. Sberbank slumped 5.3 percent last month, the steepest monthly drop since March, data compiled by Bloomberg show. Russia’s economy grew 1.6 percent in the first three months, spurring calls for easing.
“Russia’s banking sector and Sberbank specifically will naturally be attractive to investors expecting a rate cut,” Natalia Berezina, an analyst at UralSib Capital, said by phone from Moscow. “If rates are cut next month, it’ll send a positive signal for the entire sector.”
OAO Gazprom, the nation’s biggest company, increased 0.5 percent to 122.14 rubles. The stock rose 0.5 percent to $7.435 in London. Barclays Plc lifted the stock to the equivalent of buy from sell on the expectations of a higher dividend payout ratio and stability of near-term earnings, according to the e-mailed note.
OAO GMK Norilsk Nickel, the country’s biggest mining company, sank 1.4 percent to 4,676 rubles. The stock fell after the world’s largest nickel and palladium producer was cut to neutral at Citigroup Inc., which cited lower price forecasts for the company’s main products. The shares have the 10th biggest weighting in the Micex at 3.6 percent.
Crude oil, Russia’s main export earner, dropped 0.5 percent to $108.23 a barrel in London trading, after China’s growth slowed to 7.5 percent in the second quarter from 7.7 percent in the first.
Citigroup analysts said they see “little upside” for Norilsk shares, according to today’s e-mailed note.
Russian equities have the cheapest valuations among 21 emerging markets tracked by Bloomberg. The volume of shares traded on the benchmark today was 12 percent below the 30-day average, according to data compiled by Bloomberg, while the 10-day price swings rose to 15.81. Thirty-four stocks increased, while 16 declined, the data show.
The Micex surged 4.1 percent last week, the most since December 2011, as Federal Reserve Chairman Ben S. Bernanke said July 10 that the world’s biggest economy will continue to need stimulus. The gauge slid 2 percent on June 20 after comments by Bernanke that signaled the central bank may wind down its bond buying if the U.S. economy performs in line with projections.
OAO Pharmstandard, Russia’s biggest drugmaker, rose 7 percent to 1,682 rubles, a second day of gains. The drugmaker purchased an additional 800 million rubles ($24 million) of stock as of July 11, raising its buyback amount since February to 6.1 billion rubles, the company said in a July 12 statement.
The shares slumped 34 percent over three days after a July 8 shakeup in which the company 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 the planned spinoff of its over-the-counter unit for 2,180 rubles a share, equivalent to $16.67 per GDR. The GDRs were trading at a 20 percent premium before the plan was announced and added 7.2 percent to $12.77 in London today.
JPMorgan Chase & Co. reduced the stock to neutral, cutting its price estimate to $13.50 from $27. The analysts cited “damage to sentiment caused by what we believe the market sees as unfavorable treatment of minority shareholders,” according to the note.
The 14-day relative strength index on the Micex was steady at 65. The RSI measures how rapidly prices have advanced or dropped during a specified time period. Readings below 30 indicate a security may be poised to rise, while those above 70 signal a potential drop.
Thirty five stocks, or 70 percent, were trading above their 50-day moving average on the Micex on July 12. None closed at a 52-week low and none at a one-year high, according to data compiled by Bloomberg.
The Russian Volatility Index, which measures expected swings in RTS futures, climbed 0.8 percent today. The Bloomberg Russia-US Equity Index of the most-traded Russian companies in the U.S. added 1.4 percent to 90.26 on July 12, the second day of gains.
The Micex trades at 5.3 times its 12-month estimated earnings, compared with a multiple of 9.9 for the MSCI Emerging Markets Index.
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