Russian stocks headed for the longest winning streak since April 2010 as data showing China’s economy is improving stoked appetite for metal producers.
The Micex Index (INDEXCF) climbed 0.2 percent to 1,454.22 by 11:59 a.m. in Moscow, the seventh day of gains. OAO Mechel (MTLR), Russia’s largest producer of coal for steelmakers, climbed 2.6 percent to 108.70 rubles. United Co. Rusal, the world’s biggest aluminum maker, jumped 2.5 percent to 101.36 rubles.
China’s industrial production rose 10.4 percent in August from a year earlier and retail sales gained 13.4 percent, the National Bureau of Statistics said on its website today. Crude oil, Russia’s main export earner, retreated 0.9 percent to $108.58 a barrel in New York after the U.S. said Russia’s bid to get Syria to surrender its chemical weapons may avert a strike.
“Metal stocks are rallying on the China data,” Stanislav Kopylov, who helps manage about $3 billion at UralSib Asset Management in Moscow, said by phone. “The fact that the risk of the Syria conflict is subsiding is increasing investor appetite for Russian stocks.”
The Micex gauge surged 4.3 percent last week, the most since December 2011. OAO Rosneft, the nation’s largest oil producer, fell 1.7 percent to 257.97 rubles today.
Russia’s central bank will keep the refinancing rate unchanged at 8.25 percent at its next meeting on Sept. 13, according to 14 out of 22 economists in a Bloomberg survey. Russia’s economy expanded 1.2 percent in the second quarter, the Federal Statistics Service reported on Aug. 9, missing the median forecast for 2 percent. The central bank refrained from cutting interest rates for an 11th month on Aug. 9, while highlighting “significant” risks to growth.
An interest-rate cut may be seen “as a positive for the market” and would “improve sentiment,” Mattias Westman, Chief Executive Officer of Prosperity Capital Management Ltd., which oversees about $4.5b in Russian assets, said in an interview in London yesterday. At the same time “I don’t think it’ll actually have that big of an impact on the economy in real terms,” he said.
Russian equities have the cheapest valuations among 21 emerging economies tracked by Bloomberg, with shares trading at 3.8 times 12-month estimated earnings, compared with a multiple of 10.5 for the MSCI Emerging Markets Index.
The volume of shares traded on the Micex was 38 percent above the 30-day average, while 10-day price swings subsided to 19.6.
The dollar-denominated RTS Index was little changed at 1,381.14. The Bloomberg Russia-US Equity Index of the most-traded Russian stocks in New York rose 1.9 percent yesterday, while the Market Vectors Russia ETF (RSX), the largest dedicated Russian exchange-traded fund, gained 2.7 percent.
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