Russian stocks moved between gains and losses as oil producer OAO Surgutneftegas climbed after profits rose and pipemaker OAO TMK dropped on concern it will be cut from a gauge tracked by equity investors.
The Micex Index (INDEXCF) traded little changed at 1,513.32 by 1:20 p.m. in Moscow after adding as much as 0.4 percent earlier. Markets were closed yesterday for a public holiday. Surgutneftegas jumped 1.2 percent to 29.10 rubles. TMK lost 3 percent to 90.25 rubles.
Surgut said nine-month profit surged 72 percent to 204.8 billion rubles ($6.3 billion), according to Russian accounting standards, compared with the same period a year earlier. TMK, the world’s biggest pipemaker by output, may be removed from MSCI Inc.’s Russia Index, VTB Capital said Oct. 31. MSCI announces the index rebalancing results on Nov. 7.
“TMK’s possible exclusion from MSCI Russia is a negative factor for the shares,” Oleg Popov, who manages $1 billion of securities for Allianz Investments, said by phone in Moscow.
The ruble’s 6.1 percent slide versus the dollar this year led to an “earnings boost,” he said. “The company is very dependent on the ruble’s movements.”
Most of the $30 billion of cash held by Surgutneftegas is in dollars, meaning a depreciation in the ruble leads to exchange gains, higher net income and increased dividends, paid as a proportion of profit. The preferred shares rose 1.5 percent.
“Surgut’s results are a positive surprise, especially for preferred shareholders who now may expect a higher dividend, which we estimate may exceed 2 rubles,” Alexei Kokin, an analyst at UralSib Capital in Moscow, said by phone.
OAO Rostelecom’s preferred shares rose 1.9 percent to 76.64 rubles after the Vedomosti newspaper reported the fixed-line operator may make a new buyout offer to minorities. OAO Mechel (MTLR), Russia’s biggest coking-coal producer, increased 1.5 percent to 104.10 rubles.
Oil in London was steady at $106.25, while crude in New York traded at $94.45. Russia receives about half its budget revenue from natural gas and oil.
The RTS Index (RTSI$) slid 0.4 percent to 1,468.71, after a 1.1 percent drop last week. The dollar-denominated gauge entered a bull market on Oct. 10, rising 20 percent from this year’s low.
Russian equities have the cheapest valuations among 21 emerging economies monitored by Bloomberg, with shares on the Micex trading at 4.3 times projected 12-month earnings, compared with a multiple of 10.4 for the MSCI Emerging Markets Index. Ten-day price swings on the Micex fell to 9.232 from 9.242 on Nov. 1.
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