Russia Stocks Pare Last Week’s Drop as Brent Crude Advances

Russian stocks rose, paring last week’s decline, as Brent crude advanced, boosting appetite for equities in the world’s biggest energy exporter.

The Micex Index (INDEXCF) added less than 0.1 percent to 1,490.72 by 2:26 p.m. in Moscow, after dropping 1.7 percent last week. Of 50 stocks, 22 declined and 28 rose. OAO Moscow Exchange, the nation’s main bourse, jumped 2.2 percent to 62.86 rubles after being added to the MSCI Inc.’s Russia Index last week, effective Nov. 27. VTB Group, the nation’s second-biggest lender, increased 0.7 percent to 4.57 kopeks.

Brent climbed 0.7 percent to $105.82 in London, while West Texas Intermediate crude oil traded 0.3 percent lower at $94.36 in New York. Russia receives about half of its budget revenue from oil and natural gas sales. The Micex fell in the previous five trading sessions as Russia cut its average annual economic growth forecast to 2.5 percent through 2030 and the nation’s central bank left its main lending rates unchanged for a 14th month.

“This week climbing oil is offering support to the market,” Stanislav Kopylov, who helps manage about $3 billion at UralSib Asset Management in Moscow, said by phone. “Last week, there were concerns in the market that oil would decline.”

Bank of America Merrill Lynch cut its recommendation for Russia to a “modest” overweight from a “big” overweight on concern the price of Brent crude will drop, according to an e-mailed note dated Nov. 6.

American payrolls added almost twice as many workers as projected in October, data showed on Nov. 8, damping optimism for continued Federal Reserve stimulus.

“Fed tapering is the main fear in the market right now,” Mansur Mammadov, a money manager at Kazimir Partners, which oversees $300 million in assets, said by phone from Moscow.

The RTS Index (RTSI$) added 0.2 percent to 1,437.75. Russian equities have the cheapest valuations among 21 emerging economies monitored by Bloomberg, with shares on the Micex trading at 4.2 times projected 12-month earnings, compared with a multiple of 10.4 for the MSCI Emerging Markets Index.

To contact the reporter on this story: Ksenia Galouchko in Moscow at kgalouchko1@bloomberg.net

To contact the editor responsible for this story: Wojciech Moskwa at wmoskwa@bloomberg.net

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