Russia Stocks Rise From Lowest This Year as Rosneft Gains

Russia’s benchmark stock index rallied from the lowest level this year as OAO Gazprom surged on plans to sign a gas-supply deal with China.

The Micex Index added 0.2 percent to 1,487.17 by the close in Moscow, after falling 1.3 percent to the lowest since Dec. 28 yesterday. Of 50 stocks, 23 increased, one was unchanged and 26 decreased. The dollar-denominated RTS Index dropped less than 0.1 percent to 1,530.52.

Gazprom, Russia’s biggest company and natural-gas export monopoly, jumped as much as 1.5 percent after saying it intends to sign a contract with China National Petroleum Corp. to sell gas to China through a planned eastern pipeline by the end of the year. Gazprom has the second-biggest weighting on the Micex at 14 percent.

“The market’s hopes for an accord will rise and as always, speculation about the event is at least half as good as the thing itself,” Julian Rimmer, who trades Russian and Turkish stocks at CF Global Trading in London, said by e-mail. “The stock is building a solid support base at these levels.”

OAO Novorossiysk Commercial Sea Port retreated the most on the Micex, losing as much as 4.7 percent after the government said it may sell a 20 percent stake in the country’s largest Black Sea harbor through an additional share placement. The shares closed down 3 percent at 3.48 rubles.

Asset Sales

The government hasn’t yet made a final decision on how to sell its 20 percent stake in Novorossiysk, which it may offer in an additional share placement or to a strategic investor, Olga Dergunova, the head of Federal Property Management Agency, said in Moscow today. The sale, which is planned for this year, is unlikely to happen in the “spring window,” Dergunova said. Russia is interested in finding a strategic investor for the Novorossiysk shares, Economy Minister Andrei Belousov said Feb. 7 at a government meeting.

Gazprom has been negotiating a deal to supply as much as 68 billion cubic meters of gas a year to China, the world’s fastest-growing major economy, for nearly a decade since the two companies signed a cooperation deal in 2004. The talks repeatedly stalled because of disagreements on prices.

The Russian Depositary Index increased 0.2 percent, with OAO Novolipetsk Steel’s depositary receipts surging 1.6 percent.

OAO Alrosa added 0.6 percent to 34 rubles. Russia is seeking at least $1 billion from its stake sale in the diamond miner and Russian pension assets may be used to buy the company’s shares on the Moscow Exchange this year, Dergunova said today.

The companies earmarked for privatization this year include lender VTB Group, shipper OAO Sovcomflot, Alrosa and Russian Railways.

Price Swings

Oil in New York slipped 0.1 percent to $92.55 after an American Petroleum Institute report showed that U.S. inventories climbed to the highest level this year. Oil and natural gas account for about 50 percent of Russia’s budget revenue. Standard & Poor’s GSCI Index of raw materials added 0.1 percent to 654.36.

OAO Sollers, a Russian automaker that works with Ford Motor Co., surged 2.8 percent to 816.80 rubles, the most on the Micex.

Thirty-day price swings on the Micex fell to 12.164, while the number of shares traded on the gauge was 51 percent below the measure’s 10-day average, data compiled by Bloomberg show.

The Micex trades at about 5.6 times estimated earnings and has added 0.8 percent this year. That compares with a multiple of 10 times for the MSCI Emerging Markets Index, which lost 1 percent over the same period.

The Market Vectors Russia ETF, the largest dedicated Russian exchange-traded fund, gained 0.9 percent to $29.05 yesterday. The RTS Volatility Index, which measures expected swings in the index futures, was little changed at 22.04 yesterday. The Bloomberg Russia-US Equity Index of the most-traded Russian stocks in the U.S. fell 0.5 percent.

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