Russia Stocks Pare Worst Week Since June After U.S. PayrollsVladimir Kuznetsov
Russian stocks rose, paring their biggest weekly decline since June, as weaker-than-expected U.S. jobs data eased concern the Federal Reserve will speed up tapering stimulus.
The Micex Index gained 0.3 percent to 1,469.19 by close in Moscow, after earlier dropping as much as 0.7 percent. The measure fell 2.3 percent this week, the most since the period ended June 14. OAO Sberbank, Russia’s largest lender, climbed 1.5 percent and was the biggest gainer on the Micex.
Appetite for emerging market assets increased after data showed U.S. payrolls grew at the slowest pace since January 2011 last month. Fed policy makers, who in December decided to scale back so-called quantitative easing to $75 billion from $85 billion, cited improvement in the labor market. The ruble appreciated 0.4 percent against the dollar.
“The markets deliberated for a while and concluded the numbers are in favor of the QE,” Yulia Bushueva, who helps manage about $500 million in assets at Arbat Investment Services Ltd. in Moscow, said in e-mailed comments. “And if there is no bad news, why sell?”
The dollar-denominated RTS Index rose 0.5 percent to 1,395.91, trimming this year’s drop to 3.2 percent. Shares on the Micex trade at 4.4 times projected 12-month earnings, while the multiple for the MSCI Emerging Markets Index is 10.2.
OAO Magnit, the country’s biggest retailer, slumped 6.6 percent after reporting a slowdown in sales growth to 23 percent in December. That’s the slowest increase since 2009, according to BCS Financial Group. The stock, which gained 91 percent last year, fell to 8,454 rubles, the lowest close since Oct. 25.
“The company attributed slower growth to a trading-down trend, albeit mild, tougher competition from hypermarkets and abnormally warm weather which drove customers to open markets,” Luis Saenz, head of equity sales and trading at BCS Financial Group in London, said in an e-mailed note. “We expect the first two reasons to persist this year, leading to further slowdown in revenue growth, as Russian consumer has become more sophisticated and cautious.”
Outflows from Russian-dedicated funds accelerated in the week through Jan. 8 to $40 million, UralSib Capital said in a research note, citing EPFR Global data. That compares with losses of $25 million for the week to Dec. 25. Emerging-market funds posted outflows for the 11th straight week, topping $1.3 billion, Bank of America analysts led by Michael Hartnett said.
“This is a good illustration of the negative attitude taken by investors to emerging markets in general, as they keep disappointing in terms of economic performance and lack of structural reforms,” Slava Smolyaninov, chief strategist at UralSib Capital in Moscow, said in an e-mailed note.