Micex Rises as Metal Shares Gain on Yellen Bets; Uralkali JumpsKsenia Galouchko
Russian stocks gained for a second day as commodity producers rallied on bets the Federal Reserve’s next chairman will continue stimulus efforts, spurring appetite for riskier assets.
The Micex Index added 0.2 percent to 1,493.79 by the close in Moscow, a 0.3 percent advance in the week. OAO Mechel, the nation’s biggest coking coal producer, climbed 11 percent to 70.50 rubles, paring a 30 percent slump this week. OAO Severstal increased 0.9 percent to 280.50 rubles. OAO Uralkali surged 5 percent, the most since Sept. 16, to 175.15 rubles.
Billionaire Suleiman Kerimov and his business partners, who jointly control about 33 percent of Uralkali, may reach an agreement to sell the stake as soon as next week, four people with knowledge of the situation said. Janet Yellen signaled her determination to use bond buying to strengthen the U.S. economy during her confirmation hearing yesterday to be the next Fed chairman. Crude oil, Russia’s main export earner, rose 0.4 percent to $94.11 a barrel in New York.
“The market is responding to the idea that Yellen will continue stimulus measures,” Andrey Vashevnik, who manages $25 million as chief investment officer at R&B Investment Fund Ltd. in Moscow, said by phone.
The Federal Open Market Committee will probably wait to taper its bond buying to $70 billion a month from the current $85 billion at its March 18-19 meeting, according to the median estimate of 32 economists in a Bloomberg survey Nov. 8.
Mechel, which is seeking to obtain a waiver from debt covenants, tumbled as much as 47 percent on Nov. 13. The sell-off was “purely speculative” and talks with banks are on schedule to be completed by the end of the month, Arseny Palagin, a Mechel spokesman, said by phone that day.
“Investors sold off Mechel this week out of fear that they won’t be able to repay their debts, but apparently the situation isn’t all that grim,” R&B’s Vashevnik said.
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 66 percent.
A Uralkali sale may defuse a dispute between Russia and Belarus sparked by the company’s July withdrawal from a trading venture that marketed 40 percent of export shipments in the $20 billion global market for the soil nutrient. Billionaire Mikhail Prokhorov’s Onexim Group is the front-runner to take control of the world’s largest potash maker, while it may later bring in partners, the people said, asking not to be identified because the talks are private. Uralkali’s London depositary receipts jumped 7.6 percent to $27.74 by 3:40 p.m.
The RTS Index increased 0.7 percent to 1,444.24. Russian equities have the cheapest valuations among 21 emerging economies monitored by Bloomberg, with shares on the Micex trading at 4.2 times projected 12-month earnings, compared with a multiple of 10.6 for the MSCI Emerging Markets Index.