Russian equities rose, led by oil and gas producers, as UBS AG said crude producers will win from the ruble’s depreciation.
The Micex Index (INDEXCF) increased 0.7 percent in Moscow to 1,508.71 by 1:27 p.m. Oil and gas shares led gains on the Micex, rising 0.9 percent on average. OAO Surgutneftegas jumped 1.7 percent to 28.418 rubles. OAO Tatneft, a regional crude producer, gained 1.6 percent to 202.71 rubles.
Russia’s oil exporters benefit from a weaker ruble because their costs are in the local currency, Dmitry Vinogradov, an analyst at UBS, said in a report today. The bank forecasts the ruble will weaken 3.5 percent versus Bank Rossii’s target basket of dollars and euros by year-end. The currency fell 0.8 percent versus the basket today.
“The ruble weakness is beneficial for oil and gas shares,” Oleg Shagov, head of equity research at OAO Promsvyazbank, said by phone from Moscow. “These producers make more money on the conversion of dollars into rubles.”
OAO Gazprom, the nation’s biggest company, gained 0.9 percent to 147.47 rubles, while OAO Novatek, the second-largest natural gas producer, jumped 2.3 percent to 415.10 rubles. Euro-area factory output expanded faster than economists forecast in January, as the 18-nation currency bloc’s recovery gathered momentum. Europe is Russia’s biggest trade partner.
UBS said it favors Surgutneftegas and OAO Lukoil in the weaker ruble environment and cited OAO Alrosa, OAO Phosagro and OAO Acron as other beneficiaries of the currency’s drop.
Alrosa jumped 3.2 percent to 34.946 rubles, the biggest advancer on the Micex. Phosagro advanced 2.2 percent to 1,113.50 rubles.
United Co. Rusal, the world’s largest aluminum producer, dropped 4.3 percent to 117.61 rubles, the strongest slide on the Micex. The shares had rallied 17 percent over the previous two days as aluminum premiums are seen at record highs in the U.S. and Asia, researcher Harbor Intelligence said in a report dated Jan. 20. Most metals on the London Metal Exchange, including aluminum, fell today after China’s manufacturing index trailed estimates.
Russian equities have the cheapest valuations among 21 developing-nation economies monitored by Bloomberg, with shares on the benchmark Micex trading at 3 times projected 12-month earnings, compared with a multiple of 9.2 for the MSCI Emerging Markets Index.
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