Russian stocks rose to the highest level in two weeks, extending their weekly advance, amid optimism companies will benefit from the Winter Olympics, which started in Sochi today.
The Micex Index added 0.8 percent to 1,478.48 by the close in Moscow, the highest since Jan. 24. That took its five-day gain to 1.7 percent. OAO Gazprom, Russia’s biggest company, which has a 15 percent weighting in the Micex and a 23 percent weighting in MSCI Russia, increased 2.1 percent to 146.56 rubles, the most since Jan. 21. OAO M.video, Russia’s biggest electronics retailer, jumped 4 percent to 244 rubles, paring its loss this year to 18 percent.
Earnings at OAO 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 yesterday. European Central Bank President Mario Draghi yesterday left interest rates unchanged at a record low, while reiterating the ECB’s guidance on future interest rates by saying it would take further action if needed.
“The Olympics have a positive overall effect on today’s market mood,” Oleg Popov, who manages $1 billion of securities for Allianz Investments, said by phone from Moscow. “The ECB had reassured market players that it won’t be changing its accommodative policy for now.”
The Micex advanced to an intraday high after data showed a January gain in U.S. employment that trailed estimates, spurring bets further stimulus cuts may be delayed.
The ruble strengthened as much as 0.4 percent against the dollar after slumping to its lowest level in almost five years on Feb. 3. The Sochi opening ceremony took place today.
Grocer OAO Dixy Group tumbled 1.5 percent to 337.97 rubles. OAO Magnit, the nation’s biggest food retailer, dropped less than 0.1 percent to 8,455.10 rubles in Moscow and slid 3.5 percent to $52.05 in London.
Lenta Ltd., the hypermarket chain controlled by U.S. leveraged buyout firm TPG Capital, said on Feb. 3 it plans to sell shares in London, according to a regulatory filing.
“I am a strong believer that the market is positioning for some IPOs in Russia, Lenta in particular, so we’re seeing selling in Magnit, Dixy,” Kirill Yankovskiy, director for equity sales at UralSib Securities in London, said by e-mail.
The Federal Reserve last month pressed ahead with a plan to taper its monetary policy, cutting the monthly bond buying by $10 million to $65 million a month. 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.
“Payrolls are an important indicator of the Fed’s next steps,” Allianz Investments’ Popov said.
Aeroflot gained 1.1 percent to 79.79 rubles, while MTS increased 1 percent to 299 rubles.
Russia-dedicated equity funds posted more than $130 million in outflows in the week ended Feb. 5, UralSib Capital said in an e-mailed note today, citing EPFR Global data.
The MSCI Emerging Markets Index has lost 6.6 percent this year. The ruble has slumped 5.4 percent against the dollar in 2014, the third-worst performer among 24 emerging-market currencies tracked by Bloomberg.
The dollar-denominated RTS Index added 0.8 percent to 1,341.49. 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 9.2 for the MSCI Emerging Markets Index.