RTS Futures Gain Before Europe Finance Talks: Russia Overnight
RTS stock-index futures gained and Russian equities traded in the U.S. had the biggest weekly advance in 2012 ahead of European Union finance ministers’ talks today.
The Bloomberg Russia-US Equity Index (RUS14BN) of the most-traded Russian companies rose 0.5 percent to 85.60 in New York yesterday, gaining 8.1 percent for the week, the most since December. Polyus Gold International Ltd. (PLZLY), Russia’s largest producer of the metal, jumped to the highest level in five weeks and OAO Gazprom Neft advanced to a two-week high. Futures expiring on June 15 on Moscow’s dollar-denominated RTS Index climbed 1.4 percent to settle at 130,205. Russian markets are open today and closed on June 11 and June 12.
EU finance ministers will hold a conference call as they try to tame the region’s debt crisis. European Central Bank Vice President Vitor Constancio said yesterday that Spain’s request for emergency assistance is “awaited” and will be “exclusively directed at the recapitalization of banks.” Europe is Russia’s biggest trade partner and a major market for exports, including oil, natural gas and metals.
“A lot of investors are looking for some news out of Europe this weekend,” said Ed Kuczma, who helps manage $35 billion at New York-based Van Eck Associates Corp., including Russian stocks. “Europe is the biggest market for Russian energy exports. If its GDP shrinks, demand for energy declines. A lot of Russian companies have operations in Europe.”
Russia ETF Surges
The Market Vectors Russia ETF (RSX), a U.S.-traded fund that holds Russian shares, rose 0.6 percent to $25.09 yesterday, the highest level since May 21. The fund gained 8 percent during the week, ending six weeks of drops. The RTS Volatility Index, which measures expected swings in the index futures, rose 0.6 percent to 42.64 in New York yesterday.
Oil may rise next week as Organization of Petroleum Exporting Countries ministers gather in Vienna on June 14 to discuss the group’s output, U.S. crude supplies drop and countries take steps to bolster slowing economies, a Bloomberg survey showed. OPEC supplies about 40 percent of the world’s crude.
Nine of 25 analysts, or 36 percent, forecast crude will advance through June 15. Eight respondents, or 32 percent, predicted that futures will decline and eight said there will be little change.
“Oil prices should be pretty positive,” David Semple, director for international equity at the Van Eck Emerging Markets Fund, said in an interview at Bloomberg headquarters in New York yesterday. He “can certainly see a scenario” for oil prices above $100 a barrel this year. “We want to be in the game in terms of Russia. It’s a tough place to buy when oil goes down.”
Oil, Russia’s major export earner, which together with natural gas accounted for about 50 percent of budget revenue in 2011, has retreated 15 percent this year.
Crude oil for July delivery fell 0.8 percent to $84.10 a barrel on the New York Mercantile Exchange yesterday.
Brent oil for July settlement dropped 0.5 percent to $99.47 a barrel on the London-based ICE Futures Europe exchange. Urals crude, Russia’s chief export blend, rose 0.8 percent to $98.24, gaining 1.4 percent from last week. That was the first weekly gain in six.
The Standard & Poor’s GSCI Spot Index fell 0.7 percent to 588,17, trimming its weekly gain to 1.2 percent and rising for the first week in six. Russia’s Micex Index (INDEXCF) retreated 0.3 percent to 1,332.92 in Moscow, paring its weekly advance to 2.7 percent.
Polyus’s American depositary receipts jumped 4.3 percent to $2.94 in New York yesterday, the highest since May 3. The miner was the biggest gainer on the Bloomberg Russia-US Index yesterday and during the week.
Polyus plans a primary listing of shares on the London Stock Exchange on or about June 19, according to the company’s statement yesterday. The company seeks the LSE listing to expand its access to funding from international investors, said analysts, including Valentina Bogomolova at UralSib Capital in Moscow. Polyus will offer to convert its global depositary receipts traded in London into the shares, the company said in a May 17 statement.
OAO Gazprom Neft (GZPFY), the oil arm of OAO Gazprom, Russia’s biggest company by value, advanced 3.8 percent to $21.16, trading at a 2.6 percent discount to the Moscow-listed shares, the most since Sept. 22. In Moscow, Gazprom Neft shares rose 6.9 percent to 141.36 rubles, or the equivalent of $4.35. One ADR equals five ordinary shares.
Alexander Dyukov, Chief Executive Officer at Gazprom Neft, said in Moscow yesterday that the company isn’t considering buying a stake in its larger competitor, TNK-BP.
CTC Media Inc. (CTCM), the Nasdaq-listed Russian media company, fell 1.6 percent to $8.56, the lowest since Dec. 19. The stock declined 3.2 percent during the week, its seventh consecutive five-day retreat. CTC Media was the only decliner on the Bloomberg Russia-US Index for the week.
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