VimpelCom Surges as Investors Shun Commodities: Russia Overnight

VimpelCom Ltd., the world’s sixth-biggest mobile phone company, rose to the highest level in five months in New York as investors switched to Russian telecommunication shares from commodity stocks on concern a slowdown in Europe will reduce demand for metals.

The Bloomberg Russia-US Equity Index of the most-traded Russian stocks listed in the U.S. gained 0.2 percent to 93.93 yesterday. The RTS stock-index futures expiring in September added 0.2 percent to 139,290. American depositary receipts of VimpelCom jumped 3.2 percent as OAO Mobile TeleSystems, or MTS, as Russia’s biggest mobile phone company is known, climbed to the highest level in two weeks. OAO Surgutneftegas, Russia’s fourth-largest oil producer, tumbled the most in a month.

The Standard & Poor’s GSCI gauge of 24 raw materials fell for a second day as Urals, Russia’s biggest export blend, posted a three-day 1.2 percent slump. Euro-area services shrank more than initially estimated in August, adding to signs the 17-nation economy has slipped into a recession. Central bank policy makers are meeting to discuss a plan involving unlimited purchases of government debt to ease the region’s debt crisis.

“Investors prefer defensive stocks, such as Russian telecoms, because of high unpredictability on where the economy is going,” Konstantin Chernyshev, head of research at UralSib Financial Corp. said by phone from Moscow yesterday. “Investors are looking for non-commodities stocks, those that do not depend on commodity cycles.”

The Market Vectors Russia ETF, the biggest U.S.-traded exchange-traded fund that holds Russian shares, lost 0.4 percent to $27.13. The RTS Volatility Index gained 0.6 percent to 31.06 yesterday.

Plan Objections

Two central bank officials, who spoke on condition of anonymity, said Germany’s Bundesbank objected to the plan that involves sterilizing debt to assuage concerns about printing money. European Central Bank President Mario Draghi will announce a decision at a press conference today.

MTS’s ADRs increased 2.8 percent to $18.88, the highest level since Aug. 17. The jump swelled the premium versus the company’s Moscow-listed shares to 24 percent, the widest since Aug. 21. MTS shares in Moscow fell 0.1 percent to 246.04 rubles, or $7.63. One ADR represents two ordinary shares.

VimpelCom advanced to $10.99 yesterday, the highest level since April 5. The stock was the largest gainer on the Bloomberg Russia-US Index yesterday.

Urals Drops

A gauge of euro-area service industries based on a survey of purchasing managers fell to 47.2, London-based Markit Economics said. That’s below an initial estimate of 47.5. A composite index of both services and manufacturing fell to 46.3, also below an initial estimate.

Crude oil for October delivery settled at $95.36 a barrel on the New York Mercantile Exchange. Futures have retreated 3.5 percent this year.

Brent oil for October settlement lost 1 percent to end the session at $113.09 a barrel on the London-based ICE Futures Europe exchange. Brent oil underpins prices for Russia’s Urals export blend. Urals fell 0.7 percent to $111.79, the lowest level since Aug. 30.

OAO GMK Norilsk Nickel, Russia’s largest producer of nickel and palladium, dropped 0.7 percent to $14.74, the lowest level in three months. The shares in Moscow lost 0.9 percent to 4,757 rubles, or the equivalent of $147.31. Ten ADRs equal one share.

Yandex Gains

Surgutneftegas, Russia’s fourth-biggest oil producer after OAO Rosneft, OAO Lukoil and BP Plc’s Russian subsidiary TNK-BP, lost 4 percent to $6.46, dropping by the most since July 31. The shares fell 3.8 percent to 20.74 rubles, or 64 U.S. cents, in Moscow. One ADR equals 10 preferred shares.

Yandex NV, operator of Russia’s biggest search engine, gained 2.1 percent to $21.74 in New York, the highest level since May 16. Group Ltd. increased for a seventh day, adding 2 percent to $35, the longest string of gains in almost a month. The largest Russian-language Internet company said first half net income advanced 66 percent to 4 billion rubles ($123 million), compared with the same period last year, according to a statement yesterday.

United Co. Rusal, the world’s largest aluminum producer, rose 1.4 percent to HK$4.23 in Hong Kong trading as of the city’s noon break. The MSCI Asia Pacific Index gained less than 0.1 percent as investors awaited details of the ECB plan.

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