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Aganbegyan to Target IPOs as Exchanges Merge: Russia Overnight

Dec. 19 (Bloomberg) -- Russia’s newly merged stock exchange will seek to lure more companies to list in Moscow rather than abroad and try to attract more funds from local investors, said Ruben Aganbegyan, president of the Micex-RTS.

The Micex Stock Exchange merged with the RTS Exchange on Dec. 16 and will maintain their separate indexes in Moscow, with the so-called main market to trade ruble-denominated Micex-listed equities and bonds and the standard market to trade RTS-listed company stock denominated in dollars, according to a statement on the RTS website. As many as 10 companies are considering initial public offerings in Russia, Aganbegyan said.

A priority of the Micex-RTS will be to work on “getting internal investing in Russia,” he said in a Bloomberg Television interview from Moscow conducted on Dec. 16. “The other big reform this year is improving the issuance of securities in Russia to enable easier IPOs locally.”

Futures on the RTS expiring in March rose 0.6 percent to 135,695 in U.S. trading on Dec. 16, and a separate gauge measuring volatility in the futures dropped for a second day, declining 2 percent to 49.08. Phone company OAO Rostelecom jumped the most in five weeks, as Moscow brokerage Renaissance Capital raised its target price.

While the Micex handles about 70 percent of equity transactions in Russia and the RTS dominates derivatives trading, Russian stock trading in London outpaced the volumes in Moscow for 13 straight months through September, according to data compiled by Bloomberg. The gap widened to a three-year high of 50 percent in August. Since coming to power in 2008, one of President Dmitry Medvedev’s main stated aims has been to develop Moscow as a global financial center.

IPOs Postponed

Volumes on the 30-stock Micex were $1.72 billion on Dec. 16, compared with $13.2 million on Dec. 15 for the Bloomberg Russia-US 14 index of 14 Russian shares and American depositary receipts traded in New York. The Russia-US 14 index fell 0.7 percent to 89.77 on Dec. 16, down 2.2 percent last week.

“Market conditions” saw some firms postpone their stock placements “and what we’re doing is making sure we’re an exchange rated to offer products around,” Aganbegyan said.

United Co. Rusal, the world’s largest aluminum producer, lost 1.6 percent to HK$4.80 in Hong Kong trading as of 11:55 a.m. local time. The MSCI Asia Pacific Index slumped 2.4 percent after North Korean state television reported the nation’s leader Kim Jong Il had died and Fitch Ratings said it may cut some European countries’ credit ratings.

Energy Exporter

OAO Mechel, Russia’s largest producer of steelmaking coal which got 19 percent of 2010 sales from Europe, added the most in a week in U.S. trading as Luxembourg’s Prime Minister Jean-Claude Juncker said European Union states should meet a Dec. 19 deadline for arranging loans to the International Monetary Fund as part of a debt crisis-fighting accord.

The world’s biggest energy exporter, Russia is also the largest exporter of palladium and nickel, which rose to a one-week high. Europe is the country’s largest trading partner.

“For Russia, commodities are the factor to watch,” Tom Furda, director of Russian equity sales at Auerbach Grayson & Co.’s Moscow-based brokerage partner UralSib Financial Corp., said by phone from New York on Dec. 16. “In order for Russian equities to catch any wind, they’ll need positive news flow out of Europe and commodities to sustain an advance.”

Nickel gained 3.7 percent to $18,550 a ton on the London Metal Exchange, while copper surged 2 percent to settle at $3.331 a pound on the Comex in New York, the biggest advance for a most-active contract since Nov. 30. The Standard & Poor’s GSCI index of 24 raw materials was little changed at 617.90 on Dec. 16, after dropping the previous two days.

Rostelecom Gains

Mechel ADRs rose 3.1 percent to $8.95 in New York, paring their weekly decline to 11 percent. Shares on the Micex fell 5.8 percent to 282.30 rubles, or the equivalent of $8.84. One Mechel ADR is equivalent to one ordinary share.

ADRs of Rostelecom, Russia’s dominant fixed-line phone company, jumped 5.1 percent to $28.25, the biggest one-day gain since Nov. 10, after Renaissance Capital raised its price target for the company’s Moscow-traded shares to 172 rubles from 165 rubles. Rostelecom climbed 4.1 percent to 147.24 rubles in Moscow on Dec. 16, the equivalent of $4.61. One Rostelecom ADR represents six ordinary shares.

Russia was formally admitted into the World Trade Organization on Dec. 16 after 18 years of negotiations, the last major economy to enter the Geneva-based body.

The Market Vectors Russia ETF, a U.S.-traded fund that holds Russian shares, lost 0.5 percent to $26.80 on Dec. 16.

Cheapest Market

The Micex index is the cheapest of the 21 emerging-market indexes tracked by Bloomberg. The measure trades at 4.8 times analysts’ earnings estimates for member companies, compared with 9.9 times for Brazil’s Bovespa index and 14 for the BSE India Sensitive Index.

The Micex fell 0.7 percent to 1,383.42 on Dec. 16, bringing its drop in the week to 0.9 percent. The RTS slipped 1.5 percent to 1,373.73 and was down 2.6 percent last week.

Now is a good time to be “selectively buying assets” Ian McCall, Managing Partner at Quesnell Capital SA, an emerging markets investment adviser in Geneva that manages 100 million Swiss francs of assets, including Russian stock, said by phone on Dec. 16. “There’s value there for sure.”

To contact the reporters on this story: Leon Lazaroff in New York at llazaroff@bloomberg.net; Suzanne O’Halloran in New York at sohalloran@bloomberg.net

To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net

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