Russia Stocks Rise as Metal Producers Jump on Medvedev Meeting
Russian stocks climbed, extending last week’s advance, as metal companies gained on speculation the government will take steps to support the industry.
The Micex Index (INDEXCF) added 0.4 percent to 1,510.69 by 1:44 p.m. in Moscow, after rising 0.7 percent last week. Aluminum producer United Co. Rusal jumped 6.6 percent to 98.10 rubles, while OAO Magnitogorsk Iron & Steel rose 1.6 percent to 8.079 rubles. OAO Novolipetsk Steel added 3.2 percent to 54.73 rubles.
Basic materials shares led the advance among nine industry groups, increasing 1 percent on average. Prime Minister Dmitry Medvedev is meeting executives of the nation’s largest metal amd mining companies to discuss ways to sustain the industry amid slumping commodity and stock prices.
“Metal stocks are rising on the optimism the government will help them with their debts,” Vladimir Bragin, head of research at Alfa Capital in Moscow, where he helps manage $2.9 billion, said by phone. “At the same time, if the government starts interfering too much in the sector, that won’t be good for investor sentiment.”
Participants scheduled to attend include OAO Mechel (MTLR) owner Igor Zyuzin, Evraz Plc’s Chairman Alexander Abramov, United Co. Rusal chief Oleg Deripaska, OAO TMK owner Dmitry Pumpyansky and OAO GMK Norilsk Nickel owner Vladimir Potanin, according to the meeting agenda, seen by Bloomberg.
Mechel sank as much as 19 percent today, dropping 2.6 percent to 67.40 rubles. The Russian company, whose net debt was $9.55 billion as of June 1, has as much as $2.48 billion due next year, according to a June presentation on its website. The stock is the second-worst performer on the benchmark gauge this year, with a drop of 67 percent.
“We have a bit of help from sentiment that the meeting with Medvedev is going to yield some form of softening on covenants or interest holidays for metals and mining,” Kirill Yankovskiy, director for equity sales at UralSib Capital in London, said by e-mail.
Crude oil, the nation’s chief export earner, tumbled 1.4 percent to $93.51 in New York, the second day of declines after Iran and world powers reached a preliminary accord on the country’s nuclear program that will ease economic sanctions while keeping a cap on oil sales.
The RTS Index (RTSI$) gained 0.2 percent to 1,448.11. Russia’s equities have the cheapest valuations among 21 emerging economies monitored by Bloomberg, with shares on the Micex trading at 4.3 times projected 12-month earnings, compared with a multiple of 10.6 for the MSCI Emerging Markets Index.
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