Russian stocks gained for a second day as consumer shares rose and the ruble extended its advance the day before the start of the Winter Olympics in Sochi.
The Micex Index added 0.7 percent to 1,466.70 by the close in Moscow, the highest since Jan. 28 and paring this year’s loss to 2.5 percent. OAO M.video, Russia’s biggest electronics retailer, rose 1.2 percent to 234.70 rubles, reducing its 2014 decline to 22 percent. OAO Aeroflot, the nation’s largest airline, increased 3.5 percent to 78.90 rubles.
The ruble gained as much as 0.9 percent against the dollar today after slumping to its lowest level in almost five years on Feb. 3. HSBC Holdings Plc said M.video’s drop is overdone and raised the stock to the equivalent of buy from hold, according to an e-mailed note. Aeroflot and mobile operators OAO Mobile TeleSystems and OAO MegaFon will get a boost in the first quarter from the Olympics, Bank of America Merrill Lynch analysts said in an e-mailed note.
“The stock market had a decent correction, it’s recovering and the ruble is looking better now,” Vladimir Bragin, head of research at Alfa Capital in Moscow, where he helps manage $2.9 billion, said by phone. “The sectors that were oversold, like the consumer shares, are rebounding today. Investors are looking out for economic news out of Europe and the U.S. as Russia is very sensitive to external factors.”
European Central Bank President Mario Draghi today reiterated the ECB’s guidance on future interest rates and said it would take further decisive action if needed after leaving rates unchanged at a record low. Jobless claims fell in the U.S. for the first time in three weeks, Labor Department figures showed today.
While Moody’s Investors Service said yesterday the Olympics are unlikely to spur faster growth in Russia, the games will generate higher profits for Aeroflot, the country’s biggest airline, and Yandex NV, the largest online search engine service, according to Otkritie Financial Corp.
Aeroflot increased its number of regular Moscow-to-Sochi daily flights to 15 from five, according to data from its website. The Sochi opening ceremony takes place tomorrow.
“The craziness in the ruble has ended and the Olympics are supporting the currency at the moment,” Dmitry Malykhin, who oversees $30 million in Russian assets at Moscow-based hedge fund Da Vinci CIS Opportunities, said by phone.
The Labor Department may report tomorrow that businesses in the U.S. added 188,000 employees in January after an 87,000 increase in December, according to the median forecast of economists surveyed by Bloomberg.
“Investors are waiting for tomorrow’s U.S. payrolls,” Malykhin said.
OAO Rostelecom, the nation’s biggest fixed-line operator, increased 2.7 percent to 110.33 rubles, the strongest gain since Dec. 10. Rostelecom signed a deal to form a mobile venture with Tele2 Russia. The first stage gives Rostelecom 26 percent in the venture and will be completed in the spring, the company said in an e-mailed statement.
Russian stocks are rebounding after U.S. stimulus concern triggered a rout in developing-nation securities. The MSCI Emerging Markets Index has lost 7.4 percent this year, dropping 0.9 percent this week. The ruble has slumped 5.1 percent against the dollar this year, the third-worst performer among 24 emerging-market currencies tracked by Bloomberg.
The dollar-denominated RTS Index added 1 percent to 1,330.28, after rising the most in two months yesterday. Russian equities have the cheapest valuations among 21 developing-nation economies monitored by Bloomberg. Shares on the Micex trade at 3.2 times projected 12-month earnings, compared with a multiple of 9.1 for the MSCI Emerging Markets Index.