Russian stocks jumped, driving the benchmark Micex Index (INDEXCF) to a three-week high, after President Vladimir Putin said Mikhail Khodorkovsky will receive a pardon.
The Micex Index gained as much as 1.5 percent, rising for a fifth day in the longest winning streak since September, before closing at 1,497.99 in Moscow, the highest since Nov. 25. Financial, basic materials and consumer goods stocks added at least 1.2 percent on average. OAO Mobile TeleSystems increased 1.5 percent to 323.50 rubles, while OAO Sberbank, Russia’s biggest lender, advanced 1.6 percent to 101.73 rubles. Crude producer OAO Rosneft gained 1.4 percent to 245.01 rubles.
Khodorkovsky, the jailed former billionaire owner of Yukos Oil Co., will receive a presidential pardon after having requested it on humanitarian grounds, Putin said in comments broadcast on state television Rossiya 24. His case came to represent investor concern about the rule of law in Russia, where human rights and corporate governance concerns have spurred the biggest outflows from equity markets since 1996.
“For sentiment toward Russia it will be seen as quite positive,” John Heisel, the Moscow-based vice president of sales and trading at Renaissance Capital Group Inc., wrote in an e-mail today. “It could be seen as an easing environment for the political opposition in Russia.”
Stocks also gained as the Federal Reserve announced plans yesterday to cut its monthly bond purchases to $75 billion from $85 billion, citing an improved outlook for the U.S. employment market. The U.S. central bank also left unchanged its statement that it will probably hold its target interest rate near zero “at least as long as” unemployment exceeds 6.5 percent.
“The market is using the opportunity and rallying on the Khodorkovsky pardon and U.S. stimulus tapering,” Dimitri Kryukov, founder of Verno Capital, which manages about $230 million in Russian assets, said by phone from Moscow.
The Micex Index advanced an average 77 percent during the Fed’s first two rounds of bond buying, and fell 0.6 percent in periods of no stimulus, the biggest difference of 46 emerging and developed markets tracked by Bloomberg.
Russia detained more than two dozen people after a rally before Putin’s inauguration last year. Two members of female punk group Pussy Riot remain in prison after performing a song critical of the president inside Moscow’s main cathedral in February 2012. The two women will be offered freedom under an amnesty, their lawyer said on Dec. 17.
“It’s purely a lift to sentiment,” Julian Rimmer, a trader at CF Global Trading UK Ltd., said by e-mail from London. “Fundamentally it changes nothing. Liberals will interpret this as a sign that Russia wants to improve its PR and that has to be a positive even if it’s intangible and unquantifiable.”
The dollar-denominated RTS Index (RTSI$) in Moscow climbed 0.5 percent to 1,431.11. Russian equities have the cheapest valuations among 21 emerging-market economies monitored by Bloomberg, with shares on the benchmark trading at 4.5 times projected 12-month earnings compared with a multiple of 10.3 for the MSCI Emerging Markets Index.
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