Micex Extends 2013 Gains as Investors Shrug Off Terror BlastsKsenia Galouchko
Russia’s benchmark stock gauge extended this year’s gains on the last trading day of 2013 as investors bet twin bomb blasts in the country’s south won’t damage the economy.
The Micex Index added 0.6 percent to 1,504.08 by the close in Moscow, taking its increase this year to 2 percent. The nation’s biggest oil producers OAO Rosneft and OAO Lukoil advanced, climbing 1.5 percent and 1.7 percent, respectively. The two stocks have a combined 18 percent weight in the Micex.
The Micex’s advance this year compares with a 5 percent drop for the MSCI Emerging Markets Index. Bombings at a train station and on a trolleybus killed at least 26 people within 24 hours in the southern city of Volgograd. The attacks come as Russia prepares to host the Olympics in February in Sochi, a Black Sea resort close to areas of unrest in the North Caucasus.
The Micex “rarely reacts to this kind of terrorist activity,” Julian Rimmer, a trader at London-based CF Global Trading U.K. Ltd., said by e-mail. “They are usually one-off events which don’t impact the economy in the long-term.”
Russia’s gross domestic product expanded 1.2 percent in the third quarter, the slowest pace since a contraction in 2009. The Moscow bourse will shut for four days for New Year holidays starting Dec. 31. The exchange will also close Jan. 7 for Russian Orthodox Christmas.
“The biggest question is if and when Russia would be able to accelerate” growth, Slava Smolyaninov, chief strategist at UralSib Financial Corp. in Moscow, said by e-mail. “In terms of trading last week and today, there is no activity whatsoever. Most people are away.”
OAO Magnitogorsk Iron & Steel fell more than 28 percent this year and OAO Mechel sank 67 percent as the S&P GSCI index of 24 raw materials headed for the first annual decline since 2008. Mechel was the biggest advancer on the Micex today, rising 2.9 percent to 66.60 rubles.
Redemptions from Russia-dedicated equity funds reached $3.59 billion in 2013 through Dec. 18, the most since EPFR Global started tracking flows in 1996, the Boston-based research firm said by e-mail on Dec. 20.
Russian equity funds posted $178 million in outflows in the week ended Dec. 25, Sberbank CIB said in an e-mailed note Dec. 27, citing EPFR data.
Stocks were supported by President Vladimir Putin’s decision to pardon imprisoned former Yukos Oil Co. owner Mikhail Khodorkovsky this month and as two members of the Pussy Riot punk group were also freed.
OAO Magnit, the nation’s biggest food retailer, posted a 91 percent gain this year, the best on the Micex. OAO Aeroflot, the nation’s biggest airline, rose 87 percent in 2013. Aeroflot traded 1.6 percent higher at 83.81 rubles today. Magnit increased 1.1 percent to 9,218.40 rubles in Moscow.
The Micex gained 5.2 percent in 2012 and lost 17 percent in 2011.
The dollar-denominated RTS Index fell 0.2 percent to 1,442.73, deepening a 5.5 percent retreat this year. Russian equities have the cheapest valuations among 21 developing-nation economies monitored by Bloomberg, with shares on the benchmark Micex trading at 4.5 times projected 12-month earnings, compared with a multiple of 10.5 for the MSCI Emerging Markets Index.