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Russia Micex Rises to March High as Uralkali Surges Amid Bidding

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Sept. 16 (Bloomberg) -- Russian stocks climbed to the highest level in six months as OAO Uralkali, the world’s biggest potash producer, increased amid speculation a conflict with Belarus will be resolved.

The Micex Index rallied 2.1 percent to 1,470.48 by the close in Moscow, extending last week’s 1.2 percent gain and rising to the highest since March 15. Uralkali surged 6.3 percent to 189.05 rubles. OAO Mechel, Russia’s largest producer of coal for steelmakers, jumped 1.8 percent to 112 rubles, while OAO Sberbank, the country’s biggest lender, added 3.4 percent to 99 rubles. OAO Gazprom, Russia’s biggest company and natural gas export monopoly, increased 2.4 percent to 145.52 rubles.

Russian entrepreneur Vladimir Kogan, a longtime ally of President Vladimir Putin, is the leading bidder for Uralkali, seeking to buy out its three main shareholders, according to people familiar with the situation. The talks began after Belarus arrested Uralkali Chief Executive Officer Vladislav Baumgertner on Aug. 26, a month after he pulled out of a trading venture with Belarus, according to the people.

“The market is hoping that the development in the stake bidding process will soon lead to a resolution of the conflict,” Alexander Kostyukov, an analyst at Veles Capital, said by phone from Moscow. “Baumgertner is expected to be released soon and he’ll probably remain the CEO.”

Uralkali advanced 7.4 percent to $29.35 in London. OAO Rosneft, Russia’s biggest oil producer, may outbid Kogan for billionaire Suleiman Kerimov’s stake in Uralkali, RIA Novosti reported yesterday. Rosneft has no interest in potash “for now,” Interfax reported the same day, citing Rosneft CEO Igor Sechin.

Taper Expectations

Baumgertner may be extradited to Russia and the question will be decided by prosecutors in two countries and at a political level, Interfax reported today, citing an unidentified person familiar with the situation. Gazprom jumped 3.3 percent to $9 in London.

Sberbank advanced 3.7 percent to $12.19 in London. The ruble advanced 0.5 percent against Bank Rossii’s target basket of dollars and euros to 37.1294 by 6 p.m. in Moscow, the ninth day of gains. Sberbank held 46 percent of Russia’s deposits last year, according to Deposit Insurance Agency data.

Emerging-market stocks climbed to a 15-week high after Lawrence Summers withdrew from the race to be the next Federal Reserve chairman. Summers, a former Treasury secretary, would tighten Fed policy more than Janet Yellen, who was his main rival to replace Chairman Ben S. Bernanke, according to a Bloomberg Global Poll last week.

The Federal Open Market Committee will slow its monthly asset purchases to $75 billion from $85 billion at a two-day meeting that starts tomorrow, according to a Bloomberg News survey of economists on Sept. 6. Fifty-seven percent of investors surveyed in a Bloomberg Global Poll say they don’t expect a sudden change in the markets if the Fed cuts its bond purchases because they already anticipate tapering action.

Crude oil retreated 1.2 percent to $106.87 in New York, the second day of declines, on speculation the threat of imminent military strikes against Syria has eased. Russia receives about half of its budget revenue from oil and natural gas sales.

Norilsk Dividend

OAO GMK Norilsk Nickel added 1.7 percent to 4,702 rubles. The shares increased 2.3 percent to $14.55 in London. The world’s biggest producer of the metal will keep a high dividend yield, Vedomosti reported, citing CEO Vladimir Potanin.

The Micex fell 0.7 percent on Sept. 13 as Russia’s central bank kept the refinancing rate unchanged at 8.25 percent at a meeting, matching the forecast of 14 out of 22 economists in a Bloomberg survey. Bank Rossii said it will introduce a new one-week key policy rate by unifying its rates on providing and absorbing liquidity.

Russian equities have the cheapest valuations among 21 emerging economies tracked by Bloomberg, with shares trading at 4.4 times 12-month estimated earnings, compared with a multiple of 10.6 for the MSCI Emerging Markets Index.

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 volume of shares traded on the Micex was 46 percent above the 30-day average, while 10-day price swings rose to 21.768.

The dollar-denominated RTS Index advanced 2.8 percent to 1,436.14, the highest since May 22. The Bloomberg Russia-US Equity Index of the most-traded Russian stocks in New York rose 1.4 percent today, while Market Vectors Russia ETF, the largest dedicated Russian exchange-traded fund, added 1.9 percent.

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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