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Russia Stocks Snap 5-Day Drop After Rates as Metal Stocks Rally

Aug. 9 (Bloomberg) -- Russian stocks advanced, snapping a five-day retreat, as metals gained with oil and the central bank left its main lending rates unchanged for an 11th month.

The benchmark Micex Index added 1.5 percent to 1,382.72 by the 6:45 p.m. close in Moscow, trimming its decline this week to 0.7 percent. Steelmakers OAO Novolipetsk Steel and OAO Severstal led the gauge’s advance, jumping 7.8 percent and 6.6 percent, respectively. OAO Pharmstandard climbed as much as 4.6 percent after Chairman Viktor Kharitonin said the drugmaker is looking for an investor for its over-the-counter unit.

Bank Rossii kept the refinancing rate at 8.25 percent at its monetary policy meeting in Moscow, matching the median forecast of 20 economists in a Bloomberg survey. The main lending and deposit rates were also left unchanged, with Russia’s inflation remaining above target. Crude oil futures rose 2 percent to $105.44 a barrel in New York, the first gain in six days, as industrial production advanced more than forecast in China.

“Most people didn’t expect any serious moves from the central bank because inflation is still above target,” Vladimir Bragin, head of research at Alfa Capital in Moscow, where he helps manage $2.9 billion, said by phone. “Metal producers got a nice boost from optimistic Chinese data today.”

Russia’s inflation rate fell to 6.5 percent in July from a year earlier, compared with 6.9 percent in June, the Federal Statistics Service in Moscow said on Aug. 5. Bank Rossii’s target range for price increases is 5 percent to 6 percent.

Rates Meeting

Elvira Nabiullina, who took over as head of the central bank on June 24, is offering lenders longer and cheaper funds to help funnel cash into the economy and boost growth. The economy expanded 1.2 percent in the second quarter, the Federal Statistics Service reported today, missing the median forecast of 2 percent of economists surveyed by Bloomberg.

Brent crude, Russia’s main export earner, ended five days of declines, increasing 0.8 percent to $107.57 a barrel in London. Russia receives about half of its budget revenue from oil and natural gas sales. The volume of shares traded on the Micex was 36 percent below the 30-day average today, data compiled by Bloomberg show.

Metals Advance

OAO GMK Norilsk Nickel gained 2.6 percent to 4,212 rubles, paring its weekly slump to 5 percent and adding 2.5 percent to $12.73 in London. Norilsk tumbled to the lowest level since December 2009 yesterday. Shareholders of Norilsk, the world’s largest producer of nickel and palladium, started talks on potential changes to dividend payments after metal prices sank, three people with knowledge of the discussions told Bloomberg News yesterday.

Most metals, including steel, nickel and lead rose in London. Severstal climbed to 272.40 rubles, while global depositary receipts increased 6.7 percent to $8.25. NLMK rose to 53.59 rubles, with London-listed GDRs surging 8 percent to $16.30.

The Bloomberg Russia-US Equity Index of the most-traded Russian stocks in New York added 0.3 percent to 90.51, while the Market Vectors Russia ETF, the largest dedicated Russian exchange-traded fund, climbed 0.9 percent to $26.17.

The dollar-denominated RTS Index advanced 1.7 percent to 1,325.72. Russian equities have the cheapest valuations among 21 emerging economies tracked by Bloomberg at 5.2 times 12-month estimated earnings, compared with a multiple of 10 for the MSCI Emerging Markets Index.

To contact the reporter on this story: Ksenia Galouchko in Moscow at kgalouchko1@bloomberg.net

To contact the editor responsible for this story: Wojciech Moskwa at wmoskwa@bloomberg.net

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