Russian shares erased losses following six days of declines after the ruble bounced back from a record low as the central bank reiterated unlimited market interventions and crude oil rose.
The Micex Index added less than 0.1 percent to 1,463.20 by the close in Moscow as 31 stocks dropped and 19 rose. OAO Lukoil, the second-largest Russian oil producer, climbed 1.8 percent to 1,996.70 rubles, while OAO Surgutneftegas gained 1.2 percent to 27.955 rubles. OAO Magnit, the nation’s biggest food retailer slumped as much as 4.7 percent before closing down 1.6 percent at 8,120 rubles.
The Micex has lost 2.8 percent over the past six days and is poised for the worst start of the year since 2011. The Russian currency strengthened 0.6 percent, the most in a month, to 40.6599 against Bank Rossii’s target dollar-euro basket as of 6 p.m. local, after the Moscow-based regulator said it will intervene “without quantitative limitations” to support the ruble.
“Equities losses were overdone and the ruble had to rebound from those lows after the central bank displayed a more active position,” Mark Rubinstein, an analyst at Yar-Bank, said by phone from Moscow.
Crude oil, the nation’s chief export earner, added 1.2 percent to $98.53 a barrel in New York, the highest level in four weeks. Russia receives about half of its budget revenue from oil and natural gas sales.
Russia’s currency slid 1.2 percent against the basket to 40.9632 yesterday, an all-time low. A weaker ruble encourages Russians to withdraw and convert local-currency deposits, while hurting retailers by making imports more expensive. Oil producers costs are denominated in rubles and export revenue is in dollars, implying a weaker Russian currency is helpful to the likes of Lukoil and Surgutneftegas.
Lukoil gained 1.9 percent to $57 by 3:35 p.m. in London, while Surgut jumped 1.7 percent to $7.38.
“The ruble is a source of a major concern for stock investors because the best equities, especially consumer-linked companies, were connected to the strong ruble,” Mansur Mammadov, a money manager at Kazimir Partners Ltd. in Moscow, which oversees $300 million in emerging-market equities, said by phone. “People are afraid that inflation will rise and the consumer-spending power will drop.”
OAO Alrosa, the nation’s biggest diamond producer, surged 1.9 percent to 36.006 rubles. The company said its 2013 revenue rose 10 percent to 165 billion rubles, according to a preliminary figure.
Fed policy makers reduced the pace of bond buying for a second straight meeting yesterday, and the selloff in emerging markets extended. The Micex Index advanced an average 77 percent during the Fed’s first two rounds of debt purchases, and fell 0.6 percent in periods of no stimulus, the biggest difference of 46 emerging and developed markets tracked by Bloomberg. Chinese manufacturing contracted for the first time in six months in January, a private survey showed today.
The dollar-denominated RTS Index surged 1 percent to 1,320.90, the most since Dec. 23. Russian equities have the cheapest valuations among 21 developing-nation economies monitored by Bloomberg. Shares on the Micex trade at 3.3 times projected 12-month earnings, compared with a multiple of 9.1 for the MSCI Emerging Markets Index.