Russia Stocks Rise From 3-Month Low on Signal Losses Overdone

Russian stocks rose from a three-month low, paring the worst week since June, as OAO Novorossiysk Commercial Sea Port to OAO Rosneft jumped and a technical indicator signaled losses were overdone.

The Micex Index (INDEXCF) added 0.6 percent to 1,438.35 by 5:01 p.m. in Moscow, trimming a 2.8 percent drop this week. Rosneft, the nation’s biggest oil producer, gained 1.3 percent to 235 rubles, while OAO Sberbank, Russia’s largest lender, increased as much as 1.2 percent. Novorossiysk rallied 5.9 percent to 2.9090 rubles. OAO Transneft in October boosted its stake in the company to 36 percent from eight, an earnings statement showed.

Russian stocks slumped 2 percent in November, the worst month since May, amid concern the nation’s economy is foundering. The benchmark’s 14-day relative strength index dropped to 30.03 yesterday, the lowest since April and close to the 30 level that signals to some analysts that a security is poised to rebound.

“Today is a good day after a long streak of declines,” Oleg Popov, who manages $1 billion of securities for Allianz Investments, said by phone from Moscow. “Investors have been pulling money out of emerging markets.”

Developing-nation stocks headed for the biggest weekly drop in a month as investors weighed the outlook for U.S. stimulus. Russia cut its 2014 economic growth forecast to 2.5 percent from 3 percent, Interfax reported this week, citing Economy Minister Alexei Ulyukayev. This year’s inflation forecast was raised to 6.2 percent from 6 percent, the news service reported.

Inflation Accelerates

Russian inflation accelerated more than economists forecast in November, with consumer prices rising 6.5 percent from a year earlier, the Federal Statistics Service in Moscow said yesterday. That’s the fastest pace in three months and leaves less room for central bank Chairman Elvira Nabiullina to lower borrowing costs to stimulate the stalling economy.

Russia-dedicated stock funds lost less than $90 million in the week ended Dec. 4, according to an e-mailed note from UralSib Capital, which cited EPFR Global data. Redemptions reached $3.52 billion this year through Nov. 29, according to EPFR Global, the most since the Boston-based research firm started tracking flows in 1996.

OAO Gazprom was among the worst performers this week with a 5.1 percent slump, trading 0.5 percent higher at 135.65 rubles today. Shares of Russia’s biggest natural gas producer have declined amid political protests in Ukraine, a key route for natural gas shipments to the European Union.

Stock Valuations

OAO Mobile TeleSystems rose 2 percent to 311.06 rubles, while OAO MegaFon jumped 2.5 percent to 1,066 rubles. Analysts from JPMorgan Chase & Co. and Raiffeisen Bank International AG anticipate a boom in data traffic that will trigger stock rallies in MTS, Russia’s largest wireless carrier, and VimpelCom Ltd., which control the largest mobile phone operators in Ukraine.

The dollar-denominated RTS Index (RTSI$) gained 0.5 percent to 1,369.59. Russia’s equities have the cheapest valuations among 21 emerging-market economies monitored by Bloomberg, with shares on the benchmark trading at 4.1 times projected 12-month earnings, compared with a multiple of 10.5 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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