Russian stocks had the longest winning streak since April 2010 as data showing China’s economy is improving buoyed metal producers and offset a drop in crude prices that curbed appetite for oil companies’ shares.
The Micex Index rose as much as 0.9 percent before closing up 0.1 percent at 1,453.57 in Moscow for its seventh day of advances. United Co. Rusal, the world’s biggest aluminum maker, jumped 4.3 percent to 103.22 rubles. OAO Rosneft, the nation’s largest oil producer with a 5 percent weighting on the Micex, fell 1.6 percent to 258.44 rubles.
China’s industrial production rose 10.4 percent in August from a year earlier and retail sales gained 13.4 percent, the National Bureau of Statistics said on its website today. Crude retreated 2.7 percent to $106.60 a barrel in New York after reports Syria agreed to a Russian plan to surrender its chemical weapons, easing concern of a U.S. attack that may escalate the conflict and cut Middle Eastern exports.
“Metal stocks are rallying on the China data,” Stanislav Kopylov, who helps manage about $3 billion at UralSib Asset Management in Moscow, said by phone. “The fact that the risk of the Syria conflict is subsiding is increasing investor appetite for Russian stocks.”
OAO Mechel, Russia’s largest producer of coal for steelmakers, surged 6.1 percent to 112.50 rubles, its biggest jump since June 18. Coal producer OAO Raspadskaya rallied 9.6 percent, the biggest advance by percentage points on the Micex and the stock’s strongest gain in almost a year.
OAO Surgutneftegas, an oil producer, sank 2.4 percent, snapping three days of increases. Oil and gas stocks were the biggest decliners of the nine industry groups on the Micex, losing 0.5 percent on average. The Micex surged 4.3 percent last week, the most since December 2011.
“We’re seeing a strong drop in oil and Russia had been the biggest benefactor of high oil prices recently,” Oleg Popov, who manages $1 billion of securities for Allianz Investments, the asset-management arm of Europe’s biggest insurer, said by phone from Moscow.
Russia’s central bank will keep the refinancing rate unchanged at 8.25 percent at its next meeting on Sept. 13, according to 14 out of 22 economists in a Bloomberg survey. Russia’s economy expanded 1.2 percent in the second quarter, the Federal Statistics Service reported on Aug. 9, missing the median forecast for 2 percent. The central bank refrained from cutting interest rates for an 11th month on Aug. 9, while highlighting “significant” risks to growth.
An interest-rate cut may be seen “as a positive for the market” and would “improve sentiment,” Mattias Westman, Chief Executive Officer of Prosperity Capital Management Ltd., which oversees about $4.5b in Russian assets, said in an interview in London yesterday. At the same time “I don’t think it’ll actually have that big of an impact on the economy in real terms,” he said.
Russian equities have the cheapest valuations among 21 emerging economies tracked by Bloomberg, with shares trading at 3.8 times 12-month estimated earnings, compared with a multiple of 10.6 for the MSCI Emerging Markets Index.
The volume of shares traded on the Micex was 65 percent above the 30-day average, while 10-day price swings subsided to 19.475.
The dollar-denominated RTS Index closed up 0.7 percent at 1,390.55. The Bloomberg Russia-US Equity Index of the most-traded Russian stocks in New York rose 0.1 percent, while the Market Vectors Russia ETF, the largest dedicated Russian exchange-traded fund, was little changed.