Russian equities gained for a third day after crude oil rose and consumer stocks increased as investors speculated retailers may be allowed to boost their market share in the regions.
The 50-stock Micex Index added 0.8 percent to 1,481.84 by the close in Moscow, the highest level since Oct. 2. Consumer shares added 2.8 percent on average, the second-biggest advancer among industry groups. OAO Dixy Group, a supermarket chain, climbed as much as 6.4 percent on bets retailers may be allowed to boost regional market share. OAO Pharmstandard added 4.7 percent, while OAO Magnit, Russia’s biggest food retailer, increased 3 percent.
Oil, Russia’s chief export, gained 0.4 percent to $87.52 a barrel. U.S. President Barack Obama proposed a budget plan that would cut about $1.2 trillion in federal spending and raise a similar amount in taxes, a person familiar with the talks said.
“Oil is strong,” Peter Szopo, head of research at Alfa Bank in Moscow, said by phone. “Investors are hoping U.S. lawmakers will be able to reach an agreement and that risk appetite will increase.”
The Moscow Exchange added 20 new stocks to the ruble-denominated Micex Index effective today, making its composition identical to the 50-stock RTS Index, which will remain priced in dollars. The amount of shares traded on the Micex was 20 percent below the 100-day average, data compiled by Bloomberg show.
The changes in the Micex’s composition, announced by the stock exchange Nov. 22, are aimed at unifying the Micex and RTS gauges as President Vladimir Putin pursues his goal of turning Moscow into a global financial hub. The Moscow Exchange, created in 2011 when the Micex Stock Exchange merged with the RTS Exchange, offers stock, bond, currency and futures trading.
OAO Phosagro, Europe’s largest phosphate-fertilizer producer, tumbled 2 percent to 1,249.90 rubles. Preferred shares of OAO Bashneft oil producer rose 1.9 percent to 1,362.40 rubles. OAO Alrosa, a diamond producer, gained 1.1 percent to 27.466 rubles.
“Although investors are adding the 20 new stocks to their portfolios, their weighting in the index is too small to be the main driver,” Alfa’s Szopo said.
OAO Transneft, Russia’s oil pipeline operator, retreated 2.5 percent to 67,142 rubles, the biggest decliner.
OAO Rostelecom’s preferred shares climbed as much as 3.9 percent on a report the telecom operator may need to buy the stock to keep state control. The shares closed up 1.4 percent at 90.98 rubles.
Rostelecom’s units may need to buy as much as 6.7 billion rubles ($217 million) of preferred shares and convert them into ordinary stock to keep the government’s stake above 50 percent, Kommersant reported, citing proposals by Renaissance Capital.
Standard & Poor’s GSCI Index of commodities increased 0.2 percent to 638.12. The RTS Index gained 1.4 percent to 1,511.43. The Russian Depositary Index rose 0.6 percent to 1,705.88.
OAO RusHydro climbed 1.8 percent to 75.09 kopeks. The hydropower company may pay more than 25 percent of net income in dividends in five years, George Rizhinashvili, RusHydro’s deputy chairman, said in a phone interview from Moscow today. The company starts selling 10 billion shares at 1 ruble each tomorrow.
OAO GMK Norilsk Nickel added as much as 2.2 percent before closing up 0.8 percent at 5,615 rubles, a March 19 high. New Chief Executive Officer Vladimir Potanin told reporters yesterday the miner will target dividends equivalent to at least 50 percent of its annual earnings before interest, tax, depreciation and amortization with distributions made twice a year starting in 2014. Norilsk posted Ebitda of $7.2 billion in 2011.
American depositary receipts of the world’s largest nickel and palladium producer jumped 3.8 percent yesterday in New York to trade at 10.1 times estimated earnings, the highest valuation since May 18, 2010. The ADRs have surged 16 percent in December, the steepest gain on the Bloomberg Russia-US Equity Index of the most-traded Russian companies in the U.S.
“Increasing the breadth of stocks will make the Micex a more credible and user-friendly exchange,” Roland Nash, chief investment strategist at Verno Capital, which manages about $200 million in Russian equities, said by phone from Moscow on Dec. 5. “If they successfully implement the listings and it becomes the central exchange for Russian stocks, then liquidity will pick up.”
Dixy group jumped 5.1 percent to 394.12 rubles. Magnit rallied 3 percent to 4,878.40 rubles.
Russia’s antimonopoly watchdog may allow retailers to exceed the 25 percent market-share limit if they build new shopping areas, Interfax reported yesterday, citing Igor Artemyev, head of the anti-monopoly service. At present retailers can’t add outlets in a region if they have more than a quarter of the area’s total trade volume.
The Micex trades at about 5.6 times estimated earnings after adding 5.7 percent this year. That compares with a multiple of 10.6 times for the MSCI Emerging Markets Index, which has gained 14 percent.
Russian equities have the lowest valuations based on estimated earnings among 21 emerging markets tracked by Bloomberg. Russia receives about half of its budget revenue from oil and natural gas industry sales.