Russia Stocks Extend Best Weekly Advance in Month as Crude Rises

Russian stocks rose, extending their best weekly gain in a month, as increasing crude oil boosted appetite for equities in the world’s biggest energy exporter.

The Micex Index climbed 0.4 percent to 1,486.88 by the close in Moscow, taking its advance this week to 1.2 percent. OAO Inter RAO UES jumped 8.9 percent, the most since May 2, to 1.06 kopeks. Oil producers OAO Rosneft and OAO Bashneft increased more than 2 percent.

West Texas Intermediate crude rose 0.3 percent to $94.26 a barrel, set for its first gain in three weeks, while Brent crude added 0.8 percent to $106.60. Russia receives about half of its budget revenue from oil and natural gas sales.

“Oil has been rebounding and Russia has a strong dependency on the oil price,” Stanislav Kopylov, who helps manage about $3 billion at UralSib Asset Management in Moscow, said by phone.

OAO Rosneftegaz will pay 18.8 billion rubles ($560 million), or 1.308 kopeks per share, for a 13.8 percent stake in Inter RAO, according to a statement on the government website today. That’s a 34 percent premium to yesterday’s close.

OAO tumbled 3.9 percent to 278.70 rubles, the most since Aug. 16. Russia’s biggest electronics retailer said today 2013 sales rose 11 percent to 148.4 billion rubles from a year earlier, missing the 155 billion rubles average estimate in a Bloomberg survey.

‘Rains, Pours’

OAO Magnit, last year’s best Micex performer with a 91 percent gain, dropped the most since October 2011 on Jan. 10 after the company said full-year retail sales growth slowed to 23 percent in December from 29 percent a month earlier.

“It never rains, it only pours,” Luis Saenz, the head of equity sales and trading at BCS Financial Group in London, said in an e-mailed note. “We are seeing more signs of cracks in the Russian consumer story. M.Video just reported sluggish numbers today following on Magnit’s disappointing numbers last Friday.”

Magnit retreated 0.9 percent to 8,949.70 rubles, losing 1.5 percent to $60.70 in London.

OAO Uralkali, the world’s biggest potash producer, rose 1 percent to 182.50 rubles. Talks between Uralkali and a group of Chinese buyers are expected to continue next week, Argus FMB Potash said in a report today. Uralkali slid 1 percent to $27.07 in London.

“The Chinese deal is the most important for Uralkali because of high volumes,” Kopylov said. “Investors are betting they’ll agree on a good potash price.”

Russia-dedicated equity funds lost $80 million in the week ended Jan. 15, UralSib Capital said in an e-mailed note today, citing EPFR Global data. The dollar-denominated RTS Index dropped 0.1 percent to 1,395.79, erasing earlier gains of as much as 0.9 percent and extending this year’s retreat to 3.3 percent.

Russian equities have the cheapest valuations among 21 developing-nation economies monitored by Bloomberg, with shares on the benchmark Micex trading at 4.4 times projected 12-month earnings, compared with a multiple of 10 for the MSCI Emerging Markets Index.

Before it's here, it's on the Bloomberg Terminal.