Russian shares climbed for a fifth day, the longest winning streak since December, as investors awaited U.S. Federal Reserve Chairman Ben S. Bernanke’s comments on monetary policy.
The benchmark Micex Index (INDEXCF) rose 0.6 percent to 1,418.55 by 11:48 a.m. in Moscow, the highest since May 22 on a closing basis. The dollar-denominated RTS Index (RTSI$) added 0.7 percent to 1,377.72. OAO Mechel (MTLR), Russia’s biggest coking-coal producer, increased 1.7 percent to 96.40 rubles. Mechel’s ordinary and preferred shares have dropped more than 50 percent this year, the worst performers on the Micex.
The Micex surged 4.1 percent last week, the most since December 2011, afterBernanke said the world’s biggest economy will continue to need stimulus. Bernanke delivers his semi-annual monetary policy report to Congress starting today at the House Financial Services Committee.
“Investors tend to believe in the Fed right now,” Vladimir Bragin, head of research at Alfa Capital in Moscow, where he helps manage $2.9 billion, said by phone. “There’s always a risk that certain Bernanke comments might be misinterpreted and cause a selloff. I don’t expect any radically new statements, the Fed will probably reiterate that it plans to curb stimulus in a smooth way.”
The gauge slumped on June 20 after Bernanke signaled the central bank may wind down its bond buying if the U.S. economy performs in line with projections.
OAO Pharmstandard, the country’s biggest drugmaker, fell 1.3 percent to 1,717.80, snapping three days of gains. The drugmaker purchased an additional 200 million rubles ($6.2 million) of stock as of July 15, raising its buyback amount since February to 6.7 billion rubles, the company said in a statement yesterday.
Pharmstandard shares tumbled 34 percent from July 8 to July 11 after the company said it offered $630 million for Bever Pharmaceutical Pte Ltd., without disclosing why, and announced the spinoff of its own branded, non-prescription drugs business.
Russian equities have the cheapest valuations among 21 emerging markets tracked by Bloomberg. The volume of shares traded on the Micex today was 42 percent above the 30-day average, according to data compiled by Bloomberg, while 10-day price swings subsided to 18.57. Fourty stocks increased, while 10 declined, the data show.
Russia’s economy grew 1.6 percent in the first three months, the least since a 2009 recession, spurring calls for monetary easing. 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.
The 14-day relative strength index on the Micex climbed to 67.4 from 66.9 yesterday. 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.
Crude oil, Russia’s main export earner, retreated 0.6 percent to $105.37 a barrel in New York, the second day of declines.
Thirty six stocks, or 72 percent, were trading above their 50-day moving average on the Micex yesterday. One closed 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, rose 1 percent today. The Bloomberg Russia-US Equity Index of the most-traded Russian companies in the U.S. added 0.6 percent to 91.15 yesterday for the fourth day of gains.
The Micex trades at 5.3 times its 12-month estimated earnings, compared with a multiple of 10 for the MSCI Emerging Markets Index.
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