Russian stocks advanced to the highest in almost six weeks boosted by state-run OAO Gazprom and OAO Rosneft after the government was said to plan an increase in dividend payments.
The Micex Index rose 0.2 percent to 1,432.94 at the close, the highest since March 29. Gazprom gained to the strongest level since April 1, while oil producer Rosneft rose to the highest in nearly a month. Federal Grid Co., the state-run power transmission monopoly, tumbled 4.2 percent on a report that ministers plan to cut a proposed tariff increase for 2014-2015.
The government is considering an increase in dividends paid by state-controlled companies to 35 percent of profit to boost budget revenue, according to three officials with knowledge of the matter. In November state companies were ordered to pay no less than 25 percent of their net income. Rosneft added 1.3 percent to 221.34 rubles and natural gas exporter Gazprom advanced 1.1 percent to 131.86 rubles.
The measure would increase the dividend yield of the Russian equity market to about 4.5 percent from current 3.8 percent and “at least pay lip service to the concept of improving corporate governance,” Julian Rimmer, who trades Russian and Turkish stocks at CF Global Trading UK Ltd., said by e-mail. “Clearly Gazprom would be the main beneficiary of this policy.”
Gazprom management recommended a dividend of 5.99 rubles a share for last year, the company said in April. Rosneft plans a 2012 payment of 8.05 rubles a share, the crude producer said on May 6.
A 35 percent dividend payout will clearly be positive, according to Joseph Dayan, head of markets at BCS Financial Group in London.
“Investors tend to underweight government controlled companies in Russia,” he said by e-mail. “They are often perceived as black holes for capex that tend to return little cash flow to minority investors.”
The government will review the power grids’ pricing system at a meeting on May 13 chaired by Prime Minister Dmitry Medvedev, the Kommersant newspaper said today. The Economy Ministry is seeking a 6 percent increase in power tariffs for grid companies for 2014-2015 compared with 9 percent to 10 percent planned earlier, Interfax reported April 25.
“People anticipate a new wave of pressure on power prices,” Mikhail Rasstrigin, an analyst at VTB Capital, said by phone from Moscow. “Investors don’t like all these discussions nor do they like the companies saying they need more money for investment.”
OAO Russian Grids, formerly known as MRSK Holding, dropped 3.4 percent to 1.325 rubles. Federal Grid fell for a third day to 12.395 kopeks. A kopek is one hundredth of a ruble.
OAO Dixy Group jumped 5.4 percent to 447 rubles, the highest since February 28. The food retailer plans to report its April sales data next week. Larger competitor OAO Magnit reported 33 percent revenue increase in April on the back of 31 percent expansion of selling space. Magnit gained as much as 3.1 percent today before closing down 1.7 percent at 6,889 rubles.
“Magnit is a sort of read-across for peers,” Natalia Kolupaeva, an analyst at ZAO Raiffeisenbank, said by phone from Moscow. The results show “there is no slowdown in consumption,” she said.
The number of shares traded on the Micex was 10 percent below its 30-day average. The dollar-denominated RTS was little changed at 1452.17. The Moscow Exchange is closed tomorrow for a national holiday, while most businesses will remain shut through the week.
Russian equities have the cheapest valuations among 21 emerging markets tracked by Bloomberg. The Micex trades at 5.4 times 12-month estimated earnings and has lost 2.8 percent this year, compared with 11 times for the MSCI Emerging Markets Index, which has climbed 0.7 percent in the period.