Russian stocks climbed for a fifth day as President Vladimir Putin pledged to do all he can to stop the conflict in Ukraine. The ruble rebounded and bonds advanced.
The Micex Index (INDEXCF) rose 0.6 percent to 1,407.53 at the close, taking its five-day gain to 5.5 percent. The gauge closed above the 100-day moving average, which signals to some traders that further gains are likely. The ruble added 0.3 percent to 35.9060 per dollar at 6 p.m. in Moscow. The yield on 10-year bonds headed for the biggest weekly decline since 2010.
Russia shouldn’t isolate itself from the outside world and will do all that is possible to end the conflict in Ukraine, Putin said on a visit to the annexed Crimea peninsula today. Ukraine opened the door to a compromise over a humanitarian aid convoy from Russia destined for the war-torn eastern regions, saying it would accept assistance if the Red Cross distributes the aid after customs and border officers examine it.
“Putin’s speech reassured investors,” Vladimir Miklashevsky, a strategist at Danske Bank A/S in Helsinki, said by e-mail today. “This gives hope that markets won’t see an escalation in the geopolitical situation.”
The Micex is headed for the longest rally in three months. The yield on 10-year bonds fell seven basis points to 9.33 percent, extending this week’s decline to 57 basis points.
“Markets tend to overreact to statements from government officials,” Liza Ermolenko, a London-based emerging-market economist at Capital Economics, said by phone. “One important factor will be what happens to the convoy trying to enter Ukraine.”
While aid headed toward eastern Ukraine, fighting continued in areas where government forces are closing in on militant strongholds. The death toll from the fighting has doubled in the last two weeks to more than 2,000, Agence France-Presse reported yesterday, citing United Nations data.
“The separatists are gradually being pushed out and Russia is not interfering,” Ivan Guminov, a money manager at Ronin Trust in Moscow, said in e-mailed comments. “This means Putin doesn’t want to get involved in this conflict. The panic seems to be over.”
The ruble appreciated 0.1 percent against the euro to 48.1225 per euro at 6 p.m. in Moscow and gained 0.2 percent against the central bank’s target basket of dollars and euros.
OAO Sberbank, Russia’s biggest lender, climbed 0.2 percent to highest since July 25. VTB Bank gained for a second day, rising 0.6 percent.
Shares on the Micex trade at five five times projected 12-month earnings, the cheapest valuations in developing countries and compared with a multiple of 5.3 before Putin’s incursion into Crimea started March 1. The index is up 4.4 percent this week following four weeks of losses. The dollar-denominated RTS Index rose 0.9 percent to 1,231.94, the highest since July 25.
Natural gas producer OAO Novatek climbed 2.4 percent, the biggest advancer on the Micex by index points. OAO Lukoil, the second-biggest oil producer, rose 0.8 percent.
“Oil and gas may serve as a proxy for Russia, at least for the time being,” Slava Smolyaninov, a strategist at UralSib Financial Corp., said in e-mailed comments.“Investors’ optimism might reflect a general positive impression that news coming from Crimea produced.”