Russia Stocks Advance as China Data Boosts Consumer Equities
Russian stocks rose for the second time in three days as acceleration in China’s gauge of services boosted appetite for consumer companies in the world’s biggest energy exporter.
The benchmark Micex Index (INDEXCF) increased 0.2 percent to 1,394.33 by 10:57 a.m. in Moscow after dropping 0.8 percent last week. M.video, Russia’s largest electronics retailer, surged 9.3 percent, the most in a year. OAO Sollers, the Russian partner of Ford Motor Co., added 1.9 percent. Crude climbed 0.2 percent to $107.12 in New York.
China’s non-manufacturing Purchasing Managers’ Index rose to 54.1 in July from 53.9, the first acceleration since March, government data showed Aug. 3. Readings above 50 indicate expansion. Last week’s unexpected gain in a manufacturing PMI also bolstered confidence that Premier Li Keqiang’s policies are helping prevent a deeper slowdown in growth.
“The main concern for the Russian market was the fear of a Chinese slowdown since China is a major commodities importer,” Andrey Vashevnik, who manages $25 million as chief investment officer at R&B Investment Fund Ltd., said by phone in Moscow. The “Russian market is entirely a story of commodities.”
Consumer goods and consumer services shares led the gains among nine industry groups on the broader Micex. Russian equities trade at the cheapest valuations based on estimated earnings among 21 emerging economies tracked by Bloomberg.
OAO Severstal climbed 1.1 percent to 264 rubles and OAO Magnitogorsk Iron & Steel rose 1.3 percent to 7.966 rubles.
OAO PhosAgro, Europe’s largest phosphate-fertilizer producer, increased 2.1 percent to 996.90 rubles after losing 15 percent last week. Fertilizer producers’ shares slumped in the five days through Aug. 2 after OAO Uralkali said it would end production restrictions that underpinned global prices and suspend a venture with a Belarusian miner that controlled exports from the former Soviet Union. The shares slipped 0.2 percent to 158.66 rubles.
The U.S. Federal Reserve pledged last week to continue the stimulus program which triggered a rally in emerging assets, while the European Central Bank and the Bank of England left interest rates unchanged. Bank Rossii will hold a rates meeting on Aug. 9 after keeping its main lending rates unchanged for a 10th month in July, as policy makers wait for inflation to drop within the target range of 5 percent to 6 percent.
Elvira Nabiullina, who took over the central bank on June 24, is offering banks longer and cheaper funds to help funnel cash into the economy and boost growth. Russia’s gross domestic product grew 1.6 percent in the first three months, the slowest pace since 2009. Russia’s July Services PMI fell to the lowest since Aug. 2010, according to HSBC Holdings Plc data.
The dollar-denominated RTS Index (RTSI$) was little changed at 1,336.80.
The volume of shares traded on the Micex was 61 percent below the 30-day average, data compiled by Bloomberg show, while 10-day price swings rose to 12.52. The 50-member Micex’s 5.3 percent decline in 2013 compares with a 1.1 percent drop for India’s benchmark Sensex Index and a 20 percent loss for Brazil’s Ibovespa Index. (IBOV)
The Micex trades at 5.3 times its 12-month estimated earnings, compared with a multiple of 10.1 for the MSCI Emerging Markets Index.
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