Russian equities gained to the highest level since April as oil rose and industrial shares advanced, offsetting a retreat in mining stocks after Goldman Sachs Group Inc. cut the sector to neutral.
The Micex Index added 0.7 percent to 1,544.02 by the 6:45 p.m. close in Moscow, the highest level since April 3 and a 0.2 percent gain in the week, the third weekly advance. Of the 50 stocks in the gauge, 32 advanced and 18 slid. The RTS Index, Russia’s dollar-denominated equity gauge, rose 0.9 percent to 1,618.84. OAO Novorossiysk Commercial Sea Port, Russia’s largest Black Sea port, added 3.6 percent. OAO Mostotrest, a bridge and road builder, climbed 4.3 percent.
Industrial stocks led gains, adding 3.6 percent on average, followed by consumer goods. Crude oil increased 0.5 percent to $96.41 in New York, the second day of gains, amid signs of global economic growth. Russia receives about half of its budget revenue from oil and natural gas.
“Russia is highly dependent on the oil price, it’s reacting to the gains today,” Andrey Vashevnik, who manages $25 million as chief investment officer at R&B Investment Fund Ltd. in Moscow, said by phone from Moscow.
United Co. Rusal fell as much as 3.5 percent before closing down 1.8 percent at 185.23 rubles, the biggest decliner, as Goldman cut the stock to sell, citing a “negative” outlook for aluminum prices in an e-mailed note. OAO Mechel, Russia’s biggest coking coal producer, dropped as much as 1.8 percent after Goldman reiterated its sell recommendation, citing “challenging” coal market conditions. The shares closed down 0.9 percent at 207.20 rubles.
Goldman cut the mining and metals sector to neutral in Central and Eastern Europe, Middle East and Africa, citing a recent share rally.
“We downgrade our mining coverage view to neutral from attractive,” Goldman analysts led by Yulia Chekunaeva said in an e-mailed note today. “Cyclical mining stocks largely followed the rally we have seen in the commodities prices.”
Stocks extended their gains as Russian retail sales grew faster than forecast last month as unemployment unexpectedly fell. Receipts at merchants advanced 5 percent in December from a year earlier after a 4.4 percent jump in November, the Federal Statistics Service in Moscow said today in an e-mailed statement. Unemployment dropped to 5.3 percent, near a record low of 5.2 percent.
Oil climbed before trading in Moscow closed as the European Central Bank said lenders will hand back a greater amount of loans than analysts estimated and German business confidence rose for a third month in January.
The amount of shares traded on the Micex was 34 percent below the 10-day average, data compiled by Bloomberg show. The Micex’s 10-day volatility declined to 11.399, the lowest level since Dec. 28.
Standard & Poor’s GSCI Index of Commodities was little changed at 664.53. Nickel, tin and lead fell in London.
Neftetransservis, or NTS Holding Plc, the Russian freight company that bought steelmaker Evraz Plc’s rail carrier two months ago, has delayed marketing for its initial public offering, Konstantin Vyazkovsky, head of investor relations, said by phone today. The company still plans an IPO in the first half of this year, according to a statement.
Inflows into Russian equity funds over the week ending Jan. 23 were $116 million, according to a note from VTB Capital, citing EPFR Global data.
The Market Vectors Russia ETF, the largest dedicated Russian exchange-traded fund, added 0.2 percent to $30.48 yesterday, the highest level since Jan. 4. The RTS Volatility Index, which measures expected swings in the stock futures, declined 1.4 percent to 20.16.
The Micex trades at about 5.7 times estimated earnings and has added 4.7 percent this year. That compares with a multiple of 10.8 times for the MSCI Emerging Markets Index, which has gained 1.2 percent this year.
Russian equities have the lowest valuations based on estimated earnings among 21 emerging markets tracked by Bloomberg.