Russia Stocks Jump Most in Two Weeks as Magnit to MegaFon Gain

Russian shares rose the most in two weeks, snapping five days of losses, as consumer stocks rallied on speculation declines were overdone.

The Micex Index (INDEXCF) gained 1.1 percent to 1,485.34 by 2:15 p.m. in Moscow, the most since Jan. 15. OAO Magnit, the nation’s biggest food retailer with a 5.8 percent weighting in the gauge, advanced 2.3 percent to 8,417.70 rubles. OAO MegaFon, Russia’s second-largest mobile operator, rose as much as 2.8 percent.

The Micex is down 1.2 percent this year on expectations the U.S. Federal Reserve, which started a two-day meeting yesterday, will cut its $75 billion monthly bond-buying program. Consumer services shares led gains among eight industry groups on the Micex, rising 1.9 percent on average. Magnit posted a record profit margin in the fourth quarter on more favorable terms from suppliers and will increase this year’s dividend to 40 percent of net income, it said on Jan. 27.

“Today’s move looks like a rebound,” Anvar Gilyazitdinov, who manages about $10 million at Rye, Man & Gor Securities in Moscow, said by phone. “The market was oversold. Magnit experienced a very interesting decline, which makes investors want to look at the stock. We’re thinking of getting into that story.”

Sergey Galitskiy, chief executive officer of Magnit, fumed over his stock’s 19 percent plunge this month, saying on a Jan. 27 conference call that “the market is so crazy that I have to apologize for the best results in history” in 2013.

Cheapest Valuations

“Magnit investors have reacted positively to the management’s comments, they feel that the company really cares about its performance,” Dmitry Mikhailov, a money manager at Alfa Capital Partners Ltd. in Moscow, where he helps manage about $3 billion, said by phone.

Grocer OAO Dixy Group rose 2.1 percent to 339.99 rubles, as the volume of shares traded reached 3.2 times the three-month daily average.

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.

Crude oil, the nation’s chief export earner, fell 0.3 percent to $107.06 a barrel in London. Russia receives about half of its budget revenue from oil and natural gas sales.

OAO Gazprom, the country’s largest company, climbed 1.2 percent to 149.13 rubles. OAO Rosneft, Russia’s biggest oil producer, advanced 0.8 percent to 246.72 rubles.

The dollar-denominated RTS Index (RTSI$) added 0.6 percent to 1,340.75. Russian equities have the cheapest valuations among 21 developing-nation economies monitored by Bloomberg, with shares on the benchmark Micex trading at 3.3 times projected 12-month earnings, compared with a multiple of 9.2 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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