July 15 (Bloomberg) -- Russian shares rose to a seven-week high as OAO Sberbank, the country’s biggest lender, advanced after the central bank eased borrowing costs.
The benchmark Micex Index increased 0.4 percent to 1,403.56 by the close in Moscow, highest since May 22. The dollar-denominated RTS Index added 0.4 percent to 1,354.54. Sberbank, which has a 14 percent weighting in the benchmark, jumped 1.2 percent to 99.72 rubles, the highest since May 30.
While Bank Rossii kept its main rates unchanged on July 12, it introduced a one-year floating-rate facility with a starting cost of 5.75 percent, compared with its 7.5 percent fixed-rate for similar-maturity loans. Sberbank slumped 5.3 percent last month, the steepest monthly drop since March, data compiled by Bloomberg show. Russia’s economy grew 1.6 percent in the first three months, spurring calls for easing.
“Russia’s banking sector and Sberbank specifically will naturally be attractive to investors expecting a rate cut,” Natalia Berezina, an analyst at UralSib Capital, said by phone from Moscow. “If rates are cut next month, it’ll send a positive signal for the entire sector.”
OAO Gazprom, the nation’s biggest company, increased 1 percent to 122.70 rubles. The stock rose 0.7 percent to $7.455 in London. Barclays Plc lifted the stock to the equivalent of buy from sell on the expectations of a higher dividend payout ratio and stability of near-term earnings, according to the e-mailed note.
OAO GMK Norilsk Nickel, the country’s biggest mining company, sank 1.5 percent to 4,674 rubles. The stock fell after the world’s largest nickel and palladium producer was cut to neutral at Citigroup Inc., which cited lower price forecasts for the company’s main products. The shares have the 10th biggest weighting in the Micex at 3.6 percent and tumbled 0.8 percent to $14.30 in London.
Citigroup analysts said they see “little upside” for Norilsk shares, according to today’s e-mailed note. Most metals, including nickel, slumped in London. OAO Mechel, Russia’s biggest coking coal producer, lost 2.2 percent to 95.20 rubles, the most on the Micex. The shares retreated 1.4 percent to $2.86 in New York today.
Crude oil, Russia’s main export earner, dropped 0.2 percent to $105.70 a barrel in London trading, after China’s growth slowed to 7.5 percent in the second quarter from 7.7 percent in the first.
Russian equities have the cheapest valuations among 21 emerging markets tracked by Bloomberg. The volume of shares traded on the benchmark today was 16 percent below the 30-day average, according to data compiled by Bloomberg, while the 10-day price swings subsided to 19.448. Twenty nine stocks increased, while 21 declined, the data show.
The 50-member Micex’s 4.8 percent decline in 2013 compares with a 3.1 percent increase for India’s benchmark Sensex Index and Brazil’s Ibovespa Index’s 25 percent retreat.
The Micex surged 4.1 percent last week, the most since December 2011, as Federal Reserve Chairman Ben S. Bernanke said July 10 that the world’s biggest economy will continue to need stimulus. The gauge slid 2 percent on June 20 after comments by Bernanke that signaled the central bank may wind down its bond buying if the U.S. economy performs in line with projections.
OAO Pharmstandard, Russia’s biggest drugmaker, rose 5.8 percent to 1,662.20 rubles, a second day of gains and the biggest Micex advancer. The drugmaker purchased an additional 800 million rubles ($24 million) of stock as of July 11, raising its buyback amount since February to 6.1 billion rubles, the company said in a July 12 statement.
The shares slumped 34 percent over three days after a July 8 shakeup in which the company said it offered $630 million for Bever Pharmaceutical Pte Ltd., without disclosing why, and announced the spinoff of its own branded, non-prescription drugs business.
The company will offer to buy out shareholders who vote against the planned spinoff of its over-the-counter unit for 2,180 rubles a share, equivalent to $16.67 per GDR. The GDRs were trading at a 20 percent premium before the plan was announced and added 6.6 percent to $12.70 in London today.
JPMorgan Chase & Co. reduced the stock to neutral, cutting its price estimate to $13.50 from $27. The analysts cited “damage to sentiment caused by what we believe the market sees as unfavorable treatment of minority shareholders,” according to the note.
The 14-day relative strength index on the Micex climbed to 66 from 65 on July 12. The RSI measures how rapidly prices have advanced or dropped during a specified time period. Readings below 30 indicate a security may be poised to rise, while those above 70 signal a potential drop.
Thirty five stocks, or 70 percent, were trading above their 50-day moving average on the Micex on July 12. None closed at a 52-week low and none at a one-year high, according to data compiled by Bloomberg.
The Russian Volatility Index, which measures expected swings in RTS futures, climbed 0.2 percent today. The Bloomberg Russia-US Equity Index of the most-traded Russian companies in the U.S. added 0.4 percent to 90.62 today, the third day of gains.
The Micex trades at 5.3 times its 12-month estimated earnings, compared with a multiple of 9.9 for the MSCI Emerging Markets Index.
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