OAO Magnitogorsk Iron & Steel and power distributor OAO MRSK Holding are the most likely stocks to join MSCI Inc.’s Russia index when changes are announced this week, according to Troika Dialog and UralSib Financial Corp.
OAO OGK-4, the Russian utility controlled by E.ON AG, is the most likely company to be dropped when New York-based MSCI announces the results of its semi-annual review on Nov. 10, said John Heisel, a sales trader at Citigroup Inc., by phone today.
MSCI makes decisions on membership and weightings based on a company’s so-called free float, or the percentage of shares available to investors. Criteria also include the company’s market value and the representation of its industry group and home country in MSCI’s indexes. MSCI Russia’s current weighting is 55 percent oil and gas, 16 percent in financials, 14 percent materials, 7 percent telecommunications, 5 percent utilities and 3 percent consumer staples, according to the company’s website.
MRSK, which manages inter-regional electricity traders, is “the leading candidate” for inclusion in the next MSCI reshuffle, said Troika strategist Andrey Kuznetsov. MRSK has been a “favorite” to join the index for more than a year, said Chris Weafer, chief strategist at UralSib in Moscow.
Other contenders to join the MSCI measure are London-listed property developers LSR Group and PIK Group and OAO Novorossiysk Commercial Seaport, according to UralSib.
Kuznetsov said OAO Raspadskaya may be dropped because of the decline of its share price after the coal producer’s flagship mine was damaged in a deadly blast in May. OAO Polymetal, the country’s biggest silver producer, and OAO Comstar United TeleSystems, an internet provider, are also at risk of removal due to their reduced weightings in the index, according to Weafer.
The market value of Magnitogorsk gained 2.2 percent to $11.3 billion at 4:42 p.m. in Moscow today, while MRSK’s fell
0.6 percent to $2 billion.