Russian stocks rose for a third day, heading for the first weekly advance in three, as shares of consumer companies climbed and the ruble strengthened before the Winter Olympics start in Sochi today.
The Micex Index (INDEXCF) added 0.4 percent to 1,473.19 by 11:21 a.m. in Moscow, taking its five-day gain to 1.3 percent. OAO Mobile TeleSystems, the nation’s biggest wireless operator which has slid 8.5 percent this year, jumped 1.2 percent to 299.62 rubles. OAO Magnit, the nation’s biggest food retailer that is down 7.3 percent year-to-date, increased 0.9 percent to 8,539.50 rubles.
Earnings at OAO Aeroflot and mobile operators MTS and OAO MegaFon will get a boost in the first quarter from the Olympics, Bank of America Merrill Lynch analysts said in an e-mailed note yesterday. A stronger ruble helps retailers as it makes imports relatively cheaper. European Central Bank President Mario Draghi yesterday left interest rates unchanged at a record low, while reiterating the ECB’s guidance on future interest rates by saying it would take further action if needed.
“Investors are buying up consumer shares after their drop earlier this year,” Oleg Popov, who manages $1 billion of securities for Allianz Investments, said by phone from Moscow. “The ECB had reassured market players that it won’t be changing its accommodative policy for now. The Olympics have a positive overall effect on today’s market mood.”
The ruble gained as much as 0.4 percent against the dollar after slumping to its lowest level in almost five years on Feb. 3. The Sochi opening ceremony takes place today.
The Labor Department may report today U.S. businesses hired 188,000 people in January, after adding 87,000 in the previous month, according to the median estimate in a Bloomberg survey of economists. The Federal Reserve last month pressed ahead with a plan to taper its monetary policy, cutting the monthly bond buying by $10 million to $65 million a month.
“Payrolls are an important indicator of the Fed’s next steps,” Popov said.
Russia-dedicated equity funds posted more than $130 million in outflows in the week ended Feb. 5, UralSib Capital said in an e-mailed note today, citing EPFR Global data.
Russian stocks fell to the lowest level in almost two months on Feb. 3 after a reduction in stimulus by the Fed and concern that China, the world’s second-largest economy, is slowing triggered a rout in developing-nation securities.
The MSCI Emerging Markets Index has lost 6.6 percent this year. The ruble has slumped 5.1 percent against the dollar in 2014, the third-worst performer among 24 emerging-market currencies tracked by Bloomberg.
The dollar-denominated RTS Index (RTSI$) added 0.9 percent to 1,342.73. Russian equities have the cheapest valuations among 21 developing-nation economies monitored by Bloomberg. Shares on the Micex trade at 3.2 times projected 12-month earnings, compared with a multiple of 9.2 for the MSCI Emerging Markets Index.
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