Russia Stocks Snap 5-Day Drop Before Rates as Crude Oil Gains
Russia’s stocks rose, snapping a five-day retreat, as investors await the results of a central bank rates meeting and crude oil recovered.
The benchmark Micex Index (INDEXCF) added 0.3 percent to 1,366.81 by 11:08 a.m. in Moscow, trimming the decline this week to 1.8 percent. Steelmaker OAO Severstal jumped 1.5 percent, while OAO Mechel (MTLR) climbed for the second day. OAO Pharmstandard surged as much as 3.1 percent after Chairman Viktor Kharitonin said the drugmaker is looking to attract a strategic investor to buy its over-the-counter unit.
Bank Rossii will keep the refinancing rate at 8.25 percent at the meeting in Moscow, according the median estimate of 20 economists in a Bloomberg survey. Eight of the analysts expect a cut. The main lending and deposit rates will also be unchanged, two separate surveys show. Crude oil futures rose 0.6 percent to $104.01 a barrel in New York, the first gain in six days, as industrial production advanced more than forecast in China.
“For Russia, today’s theme is the CBR meeting, where we expect no change to the refinancing rate” as inflation remains above target, UralSib Capital analysts Slava Smolyaninov and Natalia Berezina said in an e-mailed note. “China will set the mood for markets with the release of retail sales and industrial production numbers.”
Bank Rossii left the main rates unchanged for a 10th month in July as policy makers wait for inflation to drop within the target range of 5 percent to 6 percent. Russia’s inflation fell to 6.5 percent in July from a year earlier, the slowest pace in eight months, compared with 6.9 percent in June, the Federal Statistics Service in Moscow said on Aug. 5.
Elvira Nabiullina, who took over as head of the central bank on June 24, is offering lenders longer and cheaper funds to help funnel cash into the economy and boost growth. Above-target increases in the cost of living have hampered the bank’s ability to head off a slowdown, even as economic growth slumped in the first half to a four-year low of 1.7 percent.
Brent crude, Russia’s main export earner, also snapped five days of declines, increasing 0.2 percent to $106.88 a barrel in London. Russia receives about half of its budget revenue from oil and natural gas sales.
The Bloomberg Russia-US Equity Index of the most-traded Russian stocks in New York added 1 percent to 90.24 yesterday while the Market Vectors Russia (RSX) ETF, the largest dedicated Russian exchange-traded fund, climbed 0.9 percent to $25.94. The RTS Volatility Index, which measures expected swings in the stock futures, tumbled 2.6 percent to 22.38 today.
The volume of shares traded on the Micex was 15 percent above the 30-day average, data compiled by Bloomberg show. Ten-day price swings rose to 15.707.
The dollar-denominated RTS Index (RTSI$) advanced 0.5 percent to 1,309.50. Russian equities have the cheapest valuations among 21 emerging economies tracked by Bloomberg at 5.2 times 12-month estimated earnings, compared with a multiple of 10 for the MSCI Emerging Markets Index.
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