Russian stocks rose the most in more than three weeks and bonds gained after talks on Ukraine yielded an agreement aimed at easing the conflict. The ruble weakened after surging the most this month yesterday.
The Micex Index added 2 percent to 1,356.54 by the close in Moscow, the most since March 25 and trimming this week’s decline to 0.4 percent. The yield on Russia’s ruble debt due February 2027 fell 17 basis points to 9 percent, the lowest in a week. The ruble declined 0.1 percent against the central bank’s basket of dollars and euros to 41.6642 by 6 p.m. The currency gained 1.4 percent yesterday.
Talks in Geneva between representatives of Russia, Ukraine, the U.S. and the European Union ended with an agreement to “de-escalate tensions and restore security,” according to a joint statement yesterday. The U.S. and its European allies have threatened to increase sanctions on Russia if it doesn’t act to calm the situation in eastern Ukraine.
“An agreement was achieved and this has reduced the tension,” Oleg Shagov, head of equity research at OAO Promsvyazbank, said by phone. “It looks like Russia won’t see new sanctions in the short term.”
Deadly clashes in eastern Ukraine this week halted a record inflow of money into the Market Vectors Exchange-Traded Fund. Investors pulled $34 million from the ETF on April 16, the first outflow since March 3. Last month saw a record $574 million of inflows, according to data compiled by Bloomberg.
The Obama administration told asset managers last week that it was planning additional sanctions against Russia over the conflict in Ukraine.
Officials from the Treasury Department and the National Security Council met in Washington with mutual-fund and hedge-fund managers, according to a person who attended. Their comments sent a message that more sanctions are on the way and that investors, if they were concerned about the impact, should manage that risk, said the person, who asked not to be identified because the discussions weren’t public.
OAO Novorossiysk Commercial Sea Port surged 10 percent to 2.43 rubles, the highest since Feb. 28. Russia may split the port into two entities under control of different shareholders, Vedomosti reported today, citing an unidentified government official.
State-run OAO Transneft will buy out the company’s oil and oil-products terminals for up to $1 billion, while privately owned Summa Group will get control over Novorossiysk seaport, which will only keep non-oil terminals, Vedomosti said.
OAO Gazprom, the nation’s natural-gas export monopoly, gained 3.1 percent to 133.90 rubles. OAO Sberbank, Russia’s biggest lender, increased 2.5 percent to 78.82 rubles.
Equities on the Micex trade at 5 times estimated earnings, the cheapest valuations among 21 developing countries monitored by Bloomberg.
Russian investment is slumping on the threat of sanctions and geopolitical risks, Economy Minister Alexei Ulyukayev said in Moscow today.
Ukraine’s hryvnia weakened 1.3 percent to 11.30 per dollar in Kiev, the first drop in five days. The Ukrainian Equities Index rose for a second day, adding 1.1 percent to 1,105.65, the biggest gain in a week on a closing basis.
The ruble weakened 0.2 percent against the dollar to 35.5440 and fell less than 0.1 percent against the euro to 49.1445. The currency is the second-worst performer against the dollar this year among 24 developing-countries currencies tracked by Bloomberg.
Putin, who annexed Ukraine’s Black Sea peninsula of Crimea last month, yesterday rejected accusations from Ukraine that he’d already deployed forces in the east of the country and said he would fight to defend compatriots outside Russia. He said he hopes he won’t have to send in troops.
“The ruble is in a slight correction today after yesterday’s strong gains on the back of Putin’s dovish comments and the Geneva accord,” Vladimir Osakovskiy, chief economist for Russia at Bank of America Corp. in Moscow, said in e-mailed comments. “If these are followed by real steps to de-escalate, the ruble has a good chance of strengthening further, given its underperformance against other emerging currencies this year.”