Russian shares climbed to the highest level in seven months as crude oil advanced and signs U.S. lawmakers will agree on a compromise debt deal boosted appetite for riskier assets.
The Micex Index (INDEXCF) rose 0.7 percent to 1,511.91 by 11:59 a.m. in Moscow, the highest intraday level since March 15. OAO Novatek, Russia’s second-biggest natural gas producer, increased 2.5 percent to 401.83 rubles. OAO Sberbank, the nation’s largest lender, added 1.1 percent to 102.69 rubles, while OAO Gazprom gained 0.9 percent to 152.58 rubles.
U.S. House Republican and Senate Democratic leaders are open to a short-term increase in the $16.7 trillion debt limit, said congressional aides of both parties who spoke on condition of anonymity. Novatek shareholder billionaire Gennady Timchenko said the gas producer is in talks with companies from India, Japan, South Korea and China to sell a 9.9 percent stake in the Yamal liquefied natural gas project. Crude rose 0.6 percent to $102.23 in New York.
“The topic of the week is the U.S. budget talks, but there’s a certainty among investors that the debt ceiling will be lifted in time to avoid default,” Aleksei Belkin, who helps manage about $4.4 billion in assets as chief investment officer at Kapital Asset Management LLC in Moscow, said by phone. “The Russian market was so oversold that now it’s attracting investors who are focusing on the most liquid stocks like Gazprom and Sberbank.”
Economists say a failure by the world’s largest borrower to repay its debt will devastate stock markets and throw the U.S. and world economies into a recession. Russia receives about half of its budget revenue from the oil and natural-gas industries.
Russian equities have the cheapest valuations among 21 emerging economies monitored by Bloomberg, with shares on the index trading at 4.4 times projected 12-month earnings, compared with a multiple of 10.5 for the MSCI Emerging Markets Index.
OAO Tatneft, a regional oil producer, increased 1.5 percent to 216.80 rubles. JPMorgan Chase & Co. raised the stock to the equivalent of buy from sell, according to an e-mailed note.
OAO Magnit, Russia’s biggest retailer, advanced 0.8 percent to 8,727.7998 rubles. Magnit fell 0.5 percent yesterday after reporting sales growth slowed in September amid increased competition and as new stores took business from old ones.
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