Russian stocks rose for the first time in three days as OAO Sberbank, the nation’s biggest lender, rallied on plans to double profit in the next five years.
The Micex Index (INDEXCF) added 0.6 percent to 1,491.85 by 12:26 p.m. in Moscow, after dropping to the lowest in a month yesterday. Of 50 stocks, 16 retreated and 34 rose. Sberbank increased 1.3 percent in Moscow and London. OAO Gazprom, the nation’s biggest company, climbed 1.1 percent to 146.40 rubles.
Sberbank plans to double profit and assets in 2014 through 2018 and sees its return on capital at 18 to 20 percent in the period, according to a strategy presentation today. The Micex slumped yesterday as improving U.S. data damped optimism for continued stimulus from the Federal Reserve.
“Sberbank’s strategy is very ambitious and aggressive,” Mark Rubinstein, head of research at IFC Metropol, said by phone from Moscow. “They’re forecasting really high profit growth. They plan to boost their effectiveness while cutting costs. This will lift shares.”
Sberbank plans to cut 30,000 employees and close 20 to 25 percent of branches over the next five years, Chief Executive Officer Herman Gref and Denis Bugrov, Sberbank senior vice president, told reporters in Moscow today.
Gazprom rallied after JPMorgan Chase & Co. raised it to the equivalent of buy, citing prospects for a gas contract with China and switching to a dividend payout based on international reporting standards, according to an e-mailed note.
Gazprom fell 1.8 percent yesterday after Interfax reported Ukraine’s state-run energy company halted purchases from the natural-gas exporter.
“The inability to reach a compromise on the issue in the near-term would be negative for Gazprom,” VTB Capital analysts led by Dmitry Loukashov said in an e-mailed note.
OAO Moscow Exchange increased 3 percent to 64.43 rubles after MSCI Inc. said last week it’s adding the nation’s main bourse to its Russia Index, effective Nov. 27.
Brent fell 0.2 percent to $106.19 in London, while West Texas Intermediate crude oil traded 0.3 percent lower at $94.86 in New York. Russia receives about half of its budget revenue from oil and natural gas sales. The Micex retreated last week as Russia cut its average annual economic growth forecast to 2.5 percent through 2030 and the nation’s central bank left its main lending rates unchanged for a 14th month.
The RTS Index (RTSI$) jumped 0.3 percent to 1,431.80. 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.
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