Russia stocks climbed, rebounding from a six-week low, as the nation’s biggest lenders advanced after a Federal Reserve official said the U.S. central bank is committed to record stimulus measures.
The ruble-based Micex Index increased 0.3 percent to 1,341.62 by the close in Moscow and the RTS Index also rose 0.3 percent to 1,322.39. Financial stocks added 0.5 percent on average. VTB Group increased 2.6 percent to 4.80 kopeks as the second-biggest lender in Russia said its free float rose to 39 percent after issuing new shares.
The RTS Index plunged as much as 20 percent from this year’s high yesterday as manufacturing conditions in Russia deteriorated in May and Chinese manufacturing indexes showed small businesses struggling, damping the economy of the world’s second-biggest oil user. Fed Bank of Atlanta President Dennis Lockhart said recent data suggest the economy isn’t strong enough to justify a reduction in the central bank’s bond-buying program, boosting the demand for riskier assets.
“Positive news from the U.S. is supporting our market and bank shares today,” Natalia Berezina, an analyst at UralSib Capital, said by phone from Moscow. “After a stretch of declines, banks are bouncing back. VTB held a successful SPO, the market is giving them credit.”
VTB sold $3.3 billion of new shares in Moscow and secured investors, including Norges Bank Investment Management, the world’s largest sovereign fund, last month. The global depositary receipts added 1.8 percent to $2.99 today. OAO Sberbank, Russia’s biggest lender, jumped as much as 2.8 percent, closing 0.2 higher at 98.89 rubles, the first gain in five days.
Russian inflation accelerated for a second month in May to the fastest pace in 21 months, limiting the central bank’s scope to cut interest rates. Consumer prices increased 7.4 percent last month from a year earlier after 7.2 percent in April, the Federal Statistics Service in Moscow said by e-mail. Consumer services stocks led the gains among nine industry groups on the Micex, adding 1.8 percent on average.
Russia’s economy will probably expand 2.3 percent in the second quarter, according to the median estimate of 9 economists in a Bloomberg survey. That’s less than the 2.5 percent forecast a month earlier.
The nation’s economy grew at the weakest pace since 2009 in the first quarter as the euro area’s longest recession hurt demand for commodity exports, federal data showed on May 17. Russia’s central bank kept its refinancing rate on hold for an eighth month in May.
“We took quite a big fall yesterday, now we’re seeing a correction, we could rise as much as 5 percent,” Sergey Kucherenko, who manages about $50 million in Russian equities at OAO Nomos Bank in Moscow, said by phone. “There are persisting concerns that the commodity growth cycle is over.”
OAO Alrosa, Russia’s biggest diamond producer, rose 3.5 percent to 33.106 rubles, the highest since Feb. 27. OAO Magnit, the nation’s largest food retailer, climbed 2.1 percent to 7,086.40 rubles. The GDRs surged 2.3 percent to $54.60.
Federal Grid Co. declined 4.1 percent to 11.15 kopeks, the lowest since April 29. The power company is seeking to raise its investment program to 200 billion rubles a year, Chief Executive Officer Oleg Budargin said today.
Crude oil increased 0.3 percent to $93.74 in New York, rising for the second day. Brent oil jumped 1 percent to $103.03 a barrel on the London-based ICE Futures Europe exchange. Urals crude, Russia’s major export blend, was little changed at $101.57 today.
The Micex tumbled the most in a year on May 23, the day after Fed Chairman Ben S. Bernanke said the central bank could reduce the pace of its asset purchases if officials see signs of sustained improvement in growth. The Fed buys $85 billion of debt a month to support the economy by putting downward pressure on interest rates.
The volume of shares traded on the Micex was 36 percent above the gauge’s 30-day average, while 10-day price swings subsided to 24.529.
Russian equities have the cheapest valuations among 21 emerging markets tracked by Bloomberg. The Micex trades at 5 times its 12-month estimated earnings and has dropped 9 percent this year, compared with a multiple of 10.2 for the MSCI Emerging Markets Index, which has retreated 5.1 percent.
The Russian Volatility Index decreased 1.6 percent to 27.16 today. The Bloomberg Russia-US Equity Index of the most-traded Russian companies in the U.S. dropped 0.7 percent to 87.49.