Micex Jumps to 3-Week High on China; Novatek Rallies on Buyback

Russian stocks rose to the highest level in three weeks as oil surged after China cut rates. OAO Novatek, Russia’s second-biggest natural-gas producer, rallied after announcing a $600 million buyback.

The Micex Index jumped 1.8 percent to 1,336.33 by the close in Moscow, the highest level since May 15 after falling as much as 1.2 percent earlier. Novatek rose 5.9 percent, the most in almost a year. OAO Transneft, Russia’s oil-pipeline operator, surged the most in two weeks after the Economy Minister said the state will retain a majority stake in the company.

Crude oil, Russia’s main export earner, added 0.5 percent to $85.48 a barrel after falling as much as 0.6 percent earlier. China cut its benchmark rates for the first time since 2008 in a bid to bolster growth, stoking appetite for riskier emerging-market assets as investors bet policy makers around the world will follow suit.

“The hope is that this would stoke Chinese demand,” Kingsmill Bond, chief strategist at Citigroup Inc. in Moscow, said by phone. “It’s helpful short-term as a part of a package of monetary easing policies but it’s not a panacea.”

Transneft rallied 4.2 percent to 44,341 rubles after Economy Minister Andrei Belousov said the government plans to reduce its stake in the company to 75 percent plus one share by 2016.

Asset-Sale Plan

The state asset-sale plan approved today also calls for the government by 2016 to sell its entire stakes in OAO Rosneft, the country’s biggest oil company, OAO RusHydro, its biggest renewable energy producer, power utility OAO Inter RAO UES and overseas crude producer OAO Zarubezhneft. The government will reduce its stake in high-voltage transmission monopoly Federal Grid Co. by the same date, Belousov said.

RusHydro gained 4.7 percent to 85.03 kopeks, the highest level in three weeks. Federal Grid climbed 2 percent to 19.33 kopeks. Inter RAO added 1 percent to 2.7 kopeks.

Novatek will buy back as much as $600 million of shares and global depositary receipts within a year from today, the company said today in a statement. The stock purchased under the program may be used for financing operations or in employee compensation and incentive programs, Novatek said.

OAO Severstal gained 3 percent to 386.20 rubles. Russia’s second-largest steel producer jumped to a one-month high as Moody’s Investors Service raised the company’s rating to one step below investment grade, citing profitability and “healthy” cash flow.

The MSCI Emerging Markets Index increased 1.3 percent to 914.09 today, the highest intraday level since May 30, while the MSCI BRIC Index of shares traded in India, Brazil, Russia and China, added 0.3 percent.

Russian stocks trade at 4.9 times estimated earnings, having lost 6.2 percent this year. That compares with a 0.3 percent drop for the MSCI Emerging-Market Index which trades at 9.4 times projected earnings.

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