Russian ADRs Gain on Fed Outlook as Ruble Strengthens With Crude

  • Mechel rallies as mining company restructures more of its debt
  • CTC Media rebounds, advancing for first time in six days

U.S.-traded Russian stocks jumped the most in two weeks and the ruble strengthened as speculation that the Federal Reserve will hold off on raising interest rates this week boosted demand for riskier assets.

Mechel OJSC, the mining company that is seeking to avert bankruptcy, ended a three-day drop as it signed an agreement with the Eurasian Development Bank to extend some debt. Television broadcaster CTC Media Inc. jumped the most since February, leading a 2.4 percent gain in the Bloomberg Russia-U.S. Equity Index.

Stocks rose and the ruble strengthened the most in emerging markets as analysts raised wagers that the Fed will hold off raising benchmark U.S. borrowing costs. The odds of an increase this week held near 30 percent, down from more than 50 percent before China roiled markets with its currency devaluation last month, data compiled by Bloomberg show. Oil, Russia’s biggest export and a major source of its government budget revenue, rose for the first time in three days.

“There is this sense that even if the Fed hikes, it’s not going to do so aggressively, and that brings some positive sentiment into the market,” Aleksei Belkin, the chief investment officer at Kapital Asset Management LLC, said by phone from Moscow on Tuesday. “Traders have been anticipating this week for so long that they’re ready for whatever happens.”

GDP Slump

The policy-setting Federal Open Market Committee meets Sept. 16-17 in Washington. Russia, the world’s largest energy exporter, is awaiting the rate decision as it is beset by its first recession since 2009. Gross domestic product shrank in each of the past two quarters and is forecast to contract 3.7 percent this year, according to the median estimate of 41 economists surveyed by Bloomberg. The dollar-denominated RTS Index has slumped 25 percent from this year’s high in May.

The ruble added 1.2 percent to 66.700 per the dollar. Brent crude, the benchmark traders use to price the country’s main export blend, rose 2.6 percent to $47.84 a barrel at 10:30 a.m. Singapore time. It’s still selling for less than half its five-year average price. The Market Vectors Russia ETF, the biggest exchange-traded fund tracking Russian stocks, rose 1.1 percent to $16.17.

CTC Media, Russia’s only publicly-traded TV broadcaster, rallied 11 percent to $1.86. The stock touched a record low on Monday after it was removed from the Market Vectors Russia ETF. Mechel jumped 6.3 percent to 95 cents. The mining company said the agreement with the Eurasian Development Bank extends 1.9 billion rubles ($28.5 million) of debt to June 2018. Last week Mechel signed an accord with VTB Group to restructure a $1 billion loan.

The futures contract on the RTS Index expiring in December increased 1.3 percent to 81,100 in U.S. hours.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE