Russian stocks extended last week’s advance as crude oil rose, boosting investor appetite for equities in the world’s biggest energy exporter.
The benchmark Micex Index (INDEXCF) added 0.7 percent to 1,402.87 by 10:41 a.m. in Moscow after gaining 0.9 percent in the five days through Aug. 23, its first weekly advance in five. Preferred shares of OAO Bashneft, an oil producer, increased 2.1 percent to 1,212 rubles. OAO Lukoil, the nation’s second-biggest oil company, climbed 0.9 percent to 1,964.10 rubles.
Crude oil futures rose 0.3 percent to $106.78 a barrel in New York, the third day of advances. Oil and emerging-market stocks gained after purchases of newly built U.S. homes fell the most in more than three years last month, tempering expectations the Federal Reserve will cut stimulus in September.
Brent crude rose for a third day, adding 0.1 percent to $111.19 a barrel in London. Russia receives about half of its budget revenue from oil and natural gas sales. The volume of shares traded on the Micex was 7.2 percent above the 30-day average today, while 10-day price swings subsided to 18, the lowest since Aug. 14, data compiled by Bloomberg show.
Russian equities have the cheapest valuations among 21 emerging economies tracked by Bloomberg at 5.3 times 12-month estimated earnings, compared with a multiple of 10 for the MSCI Emerging Markets Index. The dollar-denominated RTS Index (RTSI$) advanced 0.9 percent to 1,342.54.
Russia’s economy expanded 1.2 percent in the second quarter, the Federal Statistics Service reported on Aug. 9, missing the median forecast of 2 percent of economists surveyed by Bloomberg. The central bank refrained from cutting interest rates for an 11th month in August, while highlighting “significant” risks to growth in a statement accompanying its rates decision.
“Investors are hoping for a rate cut in the third quarter, people are expecting growth to pick up from the slump,” Smolyaninov said.
The Bloomberg Russia-US Equity Index of the most-traded Russian stocks in New York added 0.9 percent to 92.86 on Aug. 23, while the Market Vectors Russia (RSX) ETF, the largest dedicated Russian exchange-traded fund, climbed 0.5 percent to $26.70.
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