Russia Stocks Fluctuate as Magnit Rises on Sales, Gazprom Drops

Russian shares swung between gains and losses after rising to the highest level in a week yesterday as China’s industrial production missed estimates while OAO Magnit, the nation’s biggest food retailer, advanced.

The benchmark Micex Index (INDEXCF) was steady at 1,465.82 by 2:50 p.m. in Moscow, after rising 0.4 percent earlier. Magnit added 0.9 percent to 9,090 rubles as November retail sales rose 29 percent from a year earlier. OAO Gazprom, the nation’s biggest company, retreated 0.6 percent to 137.83 rubles.

Industrial shares dropped 0.8 percent on average as Chinese factory output expanded 10 percent from a year earlier in November, versus the median estimate of 10.1 percent in a Bloomberg survey of economists. Out of 50 shares, 22 rose and 28 dropped on the Micex. The International Monetary Fund cut Russia’s growth forecast for next year to 2 percent from 3 percent, it said today.

“The market has frozen,” Mansur Mammadov, a money manager at Kazimir Partners in Moscow, which oversees $300 million, said by phone. “Relatively weak China data are important, but I’m expecting the market to rise in December and January. Russian equities are still cheap and undervalued, it’s a good entry point.”

The cost of Gazprom’s project to upgrade the domestic natural-gas pipeline network to feed its South Stream link to Europe has been revised to 738.5 billion rubles ($22.6 billion), a 45 percent advance from a previous estimate of 510 billion rubles, Interfax reported yesterday, citing Gazprom documents.

Increasing Investments

“We see the news as slightly negative, since it is the latest evidence of a steady increase in Gazprom’s investment program,” Alexander Kornilov, an analyst at Alfa Bank in Moscow, said in an e-mailed note today.

Magnit’s global depositary receipts climbed 0.8 percent to $66.05. Gazprom retreated 0.7 percent to $8.40 in London. Utilities shares led the declines among industry groups on the Micex, losing 1.1 percent. OAO Inter RAO UES slumped 2.9 percent to 0.86 kopeks, extending its 65 percent slump this year.

The Micex dropped 2 percent in November, the worst month since May, amid concern the nation’s economy is foundering. Russia cut its 2014 economic growth forecast to 2.5 percent from 3 percent, while raising this year’s inflation target to 6.2 percent, Interfax reported last week, citing Economy Minister Alexei Ulyukayev.

Russia-dedicated stock funds lost less than $90 million in the week to Dec. 4, UralSib Capital said in a note last week, citing EPFR Global data. Redemptions reached $3.52 billion in 2013 through Nov. 29, the most since the Boston-based research firm started tracking flows in 1996, EPFR Global said by e-mail Dec. 3.

The dollar-denominated RTS Index (RTSI$) was steady at 1,410.86. Russia’s equities have the cheapest valuations among 21 emerging-market economies monitored by Bloomberg, with shares on the benchmark trading at 4.2 times projected 12-month earnings, compared with a multiple of 10.6 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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