Russian stocks may rally 30 percent this year as Prime Minister Vladimir Putin’s government boosts spending on pensions, ports and roads the year before elections and starts its $34 billion asset-sale program, Renaissance Capital said.
“It can be very profitable for investors to buy in a pre-election year and sell afterwards,” strategist Ovanes Oganisian said in an interview yesterday.
Russia holds parliamentary elections in December and its presidential vote next year. Oil trading above $80 a barrel has lifted the 30-stock Micex Index 3 percent so far this year compared with a 1.5 percent decline for the MSCI Emerging Markets Index. The government in October selected Renaissance and nine other banks to help it raise at least 1 trillion rubles ($34 billion) privatizing state stakes in some of the county’s biggest companies over the next three years.
OAO Rosneft has climbed 15.4 percent so far this year compared with 3.4 percent for OAO Gazprom and 7 percent for OAO Lukoil, data compiled by Bloomberg show. The Micex retreated 0.8 percent today to 1,738.42 by 4:25 p.m. in Moscow.
“There is consensus of 50 percent upside in the market’s three biggest stocks: Gazprom, Rosneft and Lukoil,” Oganisian said.
Pension increases will bolster consumer stocks this year and election campaigning will lift earnings in the media and advertising industries, Oganisian said. The governement will accelerate the country’s infrastructure overhaul that stalled after the 2008 financial crisis, he said.
Putin, 58, has continued to wield power as prime minister since handing the presidency to Medvedev in 2008 after the two consecutive terms allowed under Russia’s Constitution. Putin hasn’t ruled out running for president in 2012, when he could serve for 12 years, as Russia now has six-year presidential mandates.
The government may sell 25 percent minus one share of Rosneft, 35.5 percent minus one share of lender VTB Group and 7.58 percent minus one share of OAO Sberbank under a plan for 2011-2013, Economy Minister Elvira Nabiullina told reporters in Moscow Nov. 17.