Russia Stocks Climb to Four Week-High as Gazprom to Rusal Surge

Russian stocks rose to the highest level in four weeks as OAO Gazprom surged on speculation the nation’s biggest company will announce a pricing agreement for natural gas with China National Petroleum Corp. tomorrow.

The Micex Index climbed 0.6 percent in Moscow to 1,504.68, the highest closing level since Dec. 24. Gazprom surged 4.3 percent to 145.71 rubles, the largest jump in more than four months. United Co. Rusal, the world’s biggest aluminum producer, surged 9.6 percent, the biggest gain since the shares debuted in 2010, to 115.27 rubles.

Alexey Miller, chief executive officer of Gazprom, plans to meet CNPC Chairman Zhou Jiping in Beijing tomorrow, Gazprom spokesman Sergei Kupriyanov said by phone. Rusal advanced after President Vladimir Putin yesterday ordered central bank head Elvira Nabiullina to work on cutting the interest rates at which industrial companies borrow.

“Investors are expecting news about the deal with China; possibly the prices will be higher than the market rates,” Andrey Polischuk, an analyst at ZAO Raiffeisenbank, said by phone from Moscow. “If the speculation of higher pricing is confirmed, we’ll see a major reaction.”

Kupriyanov declined to say whether a gas-pricing agreement will be signed tomorrow. Gazprom and CNPC are close to a pricing arrangement that will allow natural gas to arrive in eastern China at about $13 per million British thermal units, Financial Times reported on Jan. 5, citing people it didn’t identify.

Gazprom added 4.2 percent to $8.59 by 3:51 p.m. in London.

Kamaz, Aeroflot

Rusal signed an accord with OAO Phosagro for 26.5 billion rubles of longterm supplies, a regulatory filing today showed. Phosagro increased 3.7 percent to 1,083 rubles, the highest since July 29.

Rusal’s gains “are a reaction to Putin’s calls to banks to reduce corporate rates for producing companies,” Slava Smolyaninov, the chief strategist at UralSib Capital LLC in Moscow, said by phone.

OAO Kamaz, the Russian truck producer partly owned by Daimler AG, climbed 5.3 percent to 53.69 rubles. Russia’s state development bank Vnesheconombank, Russia Direct Investment Fund and Rostec Corp. and Daimler AG are considering buying a stake in Kamaz held by former Troika Dialog Group owners, Interfax reported, citing Rostec General Director Sergey Chemezov.

OAO Aeroflot, the nation’s biggest airline, slumped 4.7 percent to 81.48 rubles, its largest decline since May 23 and the biggest percentage drop on the Micex. The shares had surged 41 percent since the end of November through yesterday on speculation the company will benefit from Russia’s winter Olympics and as it plans to sell as much as 10 percent of its stock this year.

Magnit Falls

OAO Magnit, the nation’s biggest retailer, dropped 3.6 percent to 8,385.10 rubles, the third day of declines. Magnit 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.

OAO fell 4.4 percent to 259.44 rubles. Russia’s biggest electronics retailer said on Jan. 17 that 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.

The dollar-denominated RTS Index added 0.1 percent to 1,395.87, down 3.3 percent in 2014.

Russian equities have the cheapest valuations among 21 developing-nation economies monitored by Bloomberg, with shares on the benchmark Micex trading at 3 times projected 12-month earnings, compared with a multiple of 9.2 for the MSCI Emerging Markets Index.

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