Jan. 14 (Bloomberg) -- Bank of America Corp. favors Russian retailers as a rebound in the $2 trillion economy should drive gains in OAO Magnit and X5 Retail Group NV.
“With the macro environment expected to improve in 2014, the state of the consumer in Russia will likely stabilize as real wage growth and unemployment remain in good shape,” a group of Bank of America analysts headed by Paul Steegers and Victor Dima, wrote in a note. “Our top picks are Magnit and X5, where the turnaround is starting to gain momentum.”
Russia’s economic growth is set to accelerate to 2.5 percent this year from 1.4 percent in 2013, according the Economy Ministry. The nation’s retail sales rose at a faster pace than economists predicted in November as unemployment fell and wages grew. Magnit, Russia’s biggest food retailer, rallied 91 percent last year, the most on the benchmark Micex Index.
Bank of America’s analysts also favor Saudi Arabia’s equities and started covering Jarir Marketing Co., which owns and operates the Jarir Bookstore retail chain, with a buy recommendation. South Africa and Turkey’s shares are the least preferred amid their “weak earnings momentum,” the analysts wrote.
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