Russian shares rose for a third day before the Federal Reserve starts its two-day policy meeting today and as OAO Gazprom advanced to a one-week high. PIK Group climbed after a stake-sale report.
The Micex Index added 0.6 percent to 1,479.39 by the close in Moscow, the highest since Nov. 28. Moscow-based PIK jumped 5.1 percent to 67.49 rubles, the highest since Aug. 26. Gazprom gained 1.6 percent to 138.60 rubles as President Vladimir Putin called for improving economic ties with Ukraine. The stock pared gains in London after Putin said it agreed to sell gas to Ukraine at a discount.
Billionaire Alexander Mamut is set to buy 16 percent and Sergey Gordeev 20 percent of PIK from billionaire Suleiman Kerimov’s Nafta Moskva, Vedomosti reported today, citing people familiar with the deal it didn’t name. The Fed may decide to begin reducing asset purchases at its meeting ending tomorrow, according to 34 percent of economists in a Dec. 6 Bloomberg survey, up from 17 percent in a Nov. 8 poll.
“We’re living and breathing what the Fed will say,” Vadim Bit-Avragim, who helps oversee about 160 billion rubles ($4.8 billion) at Kapital Asset Management LLC in Moscow, said by phone. “Most likely, there won’t be any serious changes to the Fed’s monetary policy before the end of the year. The market will try to rise in the remaining weeks of the year.”
Russia-dedicated equity funds recorded inflows of about $120 million in the week to Dec. 11, UralSib Capital said in a note on Dec. 13, citing EPFR Global data.
PIK gained 2.1 percent to $2.021 in London, while Gazprom added 0.9 percent to $8.33 by 3:34 p.m.
“Investors are betting on PIK’s reorganization under the new owners; this is a speculative gain,” Bit-Avragim said.
The accord between Russia and Ukraine allows Gazprom to sell gas to Ukraine at $268.50 per 1,000 cubic meters, Putin said after meeting Ukrainian President Viktor Yanukovych in Moscow.
Luis Saenz, head of equity sales and trading at BCS Financial Group in London, said the impact will be negative for Gazprom, as this will lead to a $3 billion reduction in its earnings before interest, taxes, depreciation and amortization.
OAO Inter RAO UES added 5.3 percent to 0.98 kopeks, the biggest Micex gainer by percentage points. The stock is the fourth-worst performer on the benchmark this year, down 60 percent.
Russia’s central bank kept interest rates unchanged for a 15th month on Dec. 13, as forecast by all 23 economists in a Bloomberg survey, after inflation accelerated more than predicted in November. An improving U.S. job market raised the chances of a reduction in the Fed’s asset purchases, Fed Bank of St. Louis President James Bullard said Dec. 9.
The dollar-denominated RTS Index in Moscow added 0.5 percent to 1,414.68. Russian equities have the cheapest valuations among 21 emerging-market economies monitored by Bloomberg, with shares on the benchmark trading at 4.2 times projected 12-month earnings compared with a multiple of 10.4 for the MSCI Emerging Markets Index.