Russian equities rose for the first time in four days, led by consumer stocks as U.S. reports showed consumer confidence increased and as MSCI Inc. boosted the weighting of OAO Magnit, the country’s biggest food retailer.
The Micex Index increased 1.4 percent to 1,397.72 by the close in Moscow. Consumer services shares led the advance among nine industry groups, adding 6.8 percent. Magnit jumped as much as 6.4 percent, trading up 5.1 percent at 7,494.20 rubles, the highest since the stock’s Moscow listing in July 2006. OAO Dixy Group retailer added 6.7 percent to 483.46 rubles, the highest since the stock’s listing in June 2007.
MSCI lifted the weighting of Magnit’s global depositary receipts to 9 percent from 4.7 percent in its Russia 10/40 Index, replacing OAO Mobile TeleSystems’ American depositary receipts and AFK Sistema’s GDRs in the gauge’s top four, according to an e-mailed note from Sberbank CIB. The reweighting may trigger $331 million of fund inflows into Magnit GDRs, VTB Capital said in a note today.
“Magnit is rising on the MSCI reweighting news,” Oleg Popov, who manages about $1 billion in assets for Allianz Investments, the asset management arm of Europe’s biggest insurer, said by phone from Moscow. “Speculators are buying the stock to sell it at a higher price after the rebalancing takes effect to the funds that track MSCI.”
The volume of shares traded on the Micex was 37 percent below the 30-day average, while 10-day price swings increased to 29.544, the highest since June 2012. Crude erased earlier losses, rising 1.4 percent to $95.46 a barrel in New York.
MSCI reduced MTS’s ADRs and Sistema’s GDRs to a combined weighting in the 10/40 index of 4.5 percent, according to today’s note from Sberbank CIB. The rebalancing will take effect June 3. MTS gained 0.9 percent to 263.93 rubles. Sistema increased 1 percent to 27.176 rubles.
Magnit surged 3.7 percent to $57.65 in London, while Sistema tumbled 2.5 percent to $19.41, the biggest decliner on the Russia Depositary Index, which added 1 percent. Magnit was the biggest gainer on the index. MTS’s ADRs fell 1.4 percent to $20.045 in New York.
Magnit’s reweighting is “a reflection of the fact that consumer demand is the key economic growth trigger in Russia,” Natalia Kolupaeva, an analyst at ZAO Raiffeisenbank, said by phone from Moscow.
Russian stocks extended gains as U.S. home prices rose in the 12 months through March by the most in seven years, according to the S&P/Case-Shiller index of property values. The Conference Board’s index of consumer sentiment climbed more than forecast to 76.2, the strongest level in more than five years.
The Micex tumbled the most in a year on May 23, after manufacturing in China unexpectedly contracted and as concern the U.S. Federal Reserve will crimp stimulus measures curbed appetite for riskier assets.
Russian consumer spending grew less than economists estimated last month, adding to evidence that the economy is losing steam, according to data released on May 24. The central bank kept its main interest rates unchanged for an eighth month in May amid accelerating inflation.
Outgoing Bank Rossii Chairman Sergey Ignatiev has limited room for policy easing with inflation more than a percentage point above target, putting Russia at odds with an international push for monetary stimulus this month. Bank Rossii is scheduled to meet on interest rates in the first half of June, just before Ignatiev steps down to be replaced by Elvira Nabiullina, a former economy minister and aide to President Vladimir Putin, on June 24.
OAO Sberbank, Russia’s biggest lender, rose 1.1 percent to 104 rubles, the first advance in four days. Sberbank is scheduled to post first-quarter earnings tomorrow. GDRs added 0.5 percent to $13.26.
Russia’s equities have the cheapest valuations among 21 emerging markets tracked by Bloomberg. The Micex trades at 5.2 times its 12-month estimated earnings and has lost 5.2 percent this year, compared with a 10.4 multiple for the MSCI Emerging Markets Index, which has dropped 2.3 percent in the period.
The dollar-denominated RTS Index increased 1 percent to 1,399.11. The Russian Volatility Index dropped 6.4 percent to 22.62. The Bloomberg Russia-US Equity Index of the most-traded Russian companies in the U.S. was little changed at 92.05 today.