Russia Stocks Pare Year’s Worst Start Since 2011 on Magnit Gain

Russian shares rose, trimming the worst start to the year since 2011 as consumer stocks rose.

The Micex Index (INDEXCF) added 0.3 percent to 1,467.00 by 2:02 p.m. in Moscow. OAO Magnit, the nation’s biggest food retailer, gained 2.6 percent to 8,333.10 rubles. OAO Alrosa, Russia’s largest diamond producer, increased 2.3 percent to 36.849 rubles.

The Micex has retreated 2.4 percent this month as Chinese manufacturing contracted and the Federal Reserve pushed ahead with stimulus cuts. The ruble slumped 6.8 percent against the dollar in January, the third-worst performing emerging-market currency.

“The Russian stock market is highly sensitive to negative global news, such as China’s economic slowdown and the Fed tapering,” Alexander Kostyukov, an analyst at Veles Capital, said by phone from Moscow said.

Russia-dedicated stock funds posted $230 million of outflows in the seven days ended Jan. 29, the seventh consecutive week of redemptions, UralSib Capital said, citing EPFR Global.

Alrosa said yesterday its 2013 revenue rose 10 percent to 165 billion rubles, according to a preliminary figure. Magnit is poised for a 9.9 percent drop this month after surging 91 pecent in 2013.

Ruble ‘Panic’

Crude oil, the nation’s chief export earner, dropped 0.7 percent to $107.21 a barrel in London. Brent crude is down 3.2 percent this month. Russia receives about half of its budget revenue from oil and natural gas sales.

“The oil price isn’t adding optimism,” Vadim Bit-Avragim, who helps oversee about 148 billion rubles ($4.4 billion) at Kapital Asset Management LLP in Moscow, said by phone. “There aren’t too many people willing to buy Russia at the moment since the ruble weakening has caused a panic.”

Russia’s currency slid 0.8 percent against a basket of dollars and euros to 40.8218, trading near an all-time low. A weaker ruble encourages Russians to withdraw and convert local-currency deposits, while hurting retailers by making imports more expensive.

Cheapest Valuations

OAO M.video, Russia’s biggest electronics retailer, and supermarket chain OAO Dixy Group are poised for the worst performance on the Micex this month after losing more than 17 percent. M.video fell 0.9 percent to 237.53 rubles today.

Fed policy makers reduced the pace of bond buying for a second straight meeting on Jan. 29, and the selloff in emerging markets extended. The Micex Index advanced an average 77 percent during the Fed’s first two rounds of debt purchases, and fell 0.6 percent in periods of no stimulus, the biggest difference of 46 emerging and developed markets tracked by Bloomberg. Chinese manufacturing contracted for the first time in six months in January, a private survey showed yesterday.

The dollar-denominated RTS Index (RTSI$) slipped 0.7 percent to 1,311.23. Russian equities have the cheapest valuations among 21 developing-nation economies monitored by Bloomberg. Shares on the Micex trade at 3.3 times projected 12-month earnings, compared with a multiple of 9.1 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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