Russian stocks climbed to a six-month high on speculation Federal Reserve stimulus cuts will be less dramatic than investors had anticipated and as OAO Alrosa surged after it was said to plan a share sale next month.
The Micex Index added 0.2 percent to 1,473.03 by the close in Moscow, a second day of advances and the highest since March 15. Alrosa increased 2.2 percent, the most since June 26, to 33.708 rubles as the world’s largest diamond miner by output was said to plan a 14 percent stake equity sale in October.
The Federal Reserve starts a two-day policy meeting today, with economists predicting the central bank will trim its monthly bond-buying program by $10 billion to $75 billion. Tapering action has already been anticipated by markets, 57 percent of investors surveyed in a Bloomberg Global Poll said.
The Micex movement is “driven by macro-factors, primarily expectations that Fed tapering will be less dramatic than previously thought,” Julian Rimmer, a trader at CF Global Trading UK Ltd., said by e-mail from London.
The Micex advanced an average 77 percent during the Fed’s first two rounds of bond buying, and fell 0.6 percent in periods of no stimulus, the biggest difference of 46 emerging and developed markets tracked by Bloomberg.
The Micex’s 14-day Relative Strength Index rose to 71.33, signaling the gauge has been overbought. 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 retreat.
Global stocks surged yesterday as former U.S. Treasury Secretary Lawrence Summers withdrew his bid to become Federal Reserve chairman. Summers would have tightened 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 growth in Russian stocks at the end of the day was driven by improving attitudes toward the global macroeconomic situation, as it appears more likely that the Fed won’t reduce quantitative easing now that Larry Summers has withdrawn his candidacy for the Fed, while the remaining candidates appear to favor looser policy,” Zachary Murray, a trader at Finam Investment Co., said by e-mail.
Alrosa plans to publish the so-called intention to float statement on the last day of this month, two people with direct knowledge of the matter said today, asking not to be identified because the information isn’t public. Alrosa spokeswoman Jane Kozenko declined to comment by phone.
Crude oil, Russia’s main export earner, dropped 1 percent to $105.56 in New York, the third day of declines, as a U.S. agreement with Russia on Syria’s chemical weapons eased the threat of a military strike.
Citigroup Inc. and Barclays Plc cut the Russian steel sector to neutral, according to e-mailed notes today. Barclays reduced Evraz Plc, OAO Novolipetsk Steel and Polymetal International Plc to the equivalent of sell and lowered its recommendation on the mining industry to negative, citing rich valuations and weak fundamentals.
Evraz dropped 1.6 percent to 137.7 pence in London, the most since Aug. 30. Polymetal tumbled 2.5 percent to 341.25 rubles in Moscow and 0.6 percent to 655.5 pence in London.
OAO Mechel, Russia’s biggest producer of coal for steelmakers, lost 1.3 percent to 110.50 rubles. OAO Severstal, the country’s second-largest steelmaker, declined 0.4 percent to 297.20 rubles and dropped 0.3 percent to $9.225 in London.
“Metal stocks are some of the most sensitive to global factors on the Russian market,” Kirill Chuyko, head of equity research at BCS Financial Group in Moscow, said by phone. “The Russian market is very sensitive to the oil price, crude is falling today.”
The Micex fell 0.7 percent on Sept. 13 as Russia’s central bank kept the refinancing rate unchanged at 8.25 percent, matching the forecast of 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.
OAO Uralkali dropped 2.6 percent to 184.06 rubles and tumbled 3.1 percent to $28.44 in London. The potash producer surged to the highest since July yesterday as Russian entrepreneur Vladimir Kogan was said to be seeking a stake.
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.
The volume of shares traded on the Micex was 11 percent above the 30-day average, while 10-day price swings were at 21.732.
The dollar-denominated RTS Index added 0.3 percent to 1,439.79, the highest since May 22. The Bloomberg Russia-US Equity Index of the most-traded Russian stocks in New York rose 0.5 percent today, while Market Vectors Russia ETF, the largest dedicated Russian exchange-traded fund, was little changed.