Russia Stocks Climb on VTB Ruble Boost, Equity Fund Inflows

Russian stocks climbed as the ruble’s recent gains boosted banks, while equity funds received the strongest inflows in almost a year.

The 50-stock Micex Index added 0.2 percent to 1,510.84 by the close in Moscow, for a 2.4 percent weekly gain. The amount of shares traded on the Micex was nearly double the 30-day average, data compiled by Bloomberg show. VTB Group, the nation’s second-biggest bank, jumped 4.3 percent, leading gains on the gauge as a stronger ruble boosted the value of its local-currency bond holdings.

Russia-focused equity funds had $495 million of inflows in the week through Jan. 9, the most since February, according to an e-mailed report from VTB Capital, which cited data from EPFR Global. The ruble surged the most against the regulator’s target euro-dollar basket in four months on Jan. 8, the first day of trading this year, as it caught up with a global commodities rally and climbed on foreign appetite for local debt.

“Fund flow data this week is very compelling,” Julian Rimmer, a trader at CF Global Trading UK in London, said by e-mail. The ruble’s strength is “positive for banks,” while “clearly inhibiting oil and gas performance” where companies’ costs are priced in the local currency, he said.

OAO Rosneft, Russia’s biggest oil producer, sank 0.6 percent to 265.44 rubles, falling for a second day. OAO Bashneft, a regional producer, slid 1.9 percent to 1,792.7 rubles. OAO Sberbank, the country’s largest lender, added 1.2 percent.

Interventions Resumed

The ruble’s rally prompted Russia’s central bank to resume currency purchases aimed at quelling gains that can hurt exporters after a month’s absence on the local currency market in December.

OAO Lukoil, the second biggest oil producer, retreated for a fifth day in New York, leading the worst start to a year since 2008 for Russian crude producers. The shares traded down 0.2 percent at 2,005.10 rubles in Moscow.

“There is no reason to expect any significant increase in Russian oil companies’ profits this year,” Vladimir Tikhomirov, the chief economist at Otkritie, said by phone from Geneva yesterday. “A stronger ruble doesn’t help exporters.”

The currency slid 0.7 percent against the basket today, leaving it little changed in the week after Bank Rossii said it bought almost 10 billion rubles ($330 million) of foreign currency since trading started this year.

Oil fell 0.7 percent to $93.13 a barrel in New York, still near a four-month high. Crude and natural gas account for about 50 percent of Russia’s state revenue.

Lowest Valuations

Russian stocks were also bolstered by remarks yesterday from European Central Bank President Mario Draghi, who said the euro-area economy will return to health in 2013.

“Draghi’s remarks had a positive bias,” Peter Szopo, head of research at Alfa Bank, wrote in an e-mailed report.

The Micex trades at about 5.6 times estimated earnings. That compares with a multiple of 10.8 times for the MSCI Emerging Markets Index.

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.

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