Russian Stocks Rally With Bonds as Poroshenko Wins Ukraine VoteKsenia Galouchko
Russia’s benchmark equity gauge rose to a three-month high and government bonds climbed after Petro Poroshenko won Ukraine’s presidential election, fostering optimism the standoff between the two nations may ease.
The Micex Index rose 0.7 percent to 1,449.36 by the close in Moscow, the highest since Feb. 26, erasing its retreat since President Vladimir Putin’s intervention in Ukraine began March 1. The yield on February 2027 ruble notes dropped four basis points to 8.74 percent, the lowest since March 5. The ruble was little changed at 39.7865 by 6 p.m. versus the central bank’s target dollar-euro basket. Ukrainian assets also rallied.
Poroshenko got 54 percent of yesterday’s vote with 72.3 percent of ballots counted, the Election Commission said in Kiev. Conciliatory remarks by Putin have eased concern violence in eastern Ukraine will lead to tougher U.S. and European sanctions. Russia will work with the new president, even though the poll won’t meet international standards, Putin said May 23.
“We’re expecting market growth because of the relatively calm elections in Ukraine and expectations that they will be limited to the first round,” Denis Zabolotnev, head of equities trading at BCS Financial Group in Moscow, said by e-mail. “Russia has signaled to the market that it won’t increase tension. However, we’ll be closely watching for any official statements.”
Russia’s Foreign Minister Sergei Lavrov said the fact the ballot was held is positive and reiterated Putin’s earlier pledge to respect the election’s outcome. There’s now an opportunity to establish a “mutually respectful, equal dialogue,” he told reporters today in Moscow.
Russian stocks trade at 5.3 times estimated 12-month earnings, the cheapest among 21 emerging-country gauges tracked by Bloomberg, even after a 17 percent advance from this year’s low on March 14, the last trading day before Crimea voted in a referendum to join Russia.
OAO Sberbank, the nation’s biggest lender, added 1.2 percent. OAO TMK, the world’s largest maker of pipes for the oil and gas industry by volume, advanced 1.9 percent.
Out of 50 Micex stocks, 92 percent traded above the 50-day moving average on May 23, according to data compiled by Bloomberg, signaling to some analysts that shares may extend gains.
“Poroshenko’s victory was expected, polls were signaling it last week,” Igor Akinshin, a foreign-exchange trader at OAO Alfa Bank, said by phone from Moscow. “Putin’s comment last week that Russia will work with the new president was taken very positively.”
The ruble was little changed at 34.1815 versus the dollar, heading for a 4.3 percent advance this month, the best performance among 24 emerging-market currencies tracked by Bloomberg. The ruble declined 0.1 percent to 46.6370 against the euro.
The ruble erased gains earlier in the day because traders were closing bets opened May 23 on the currency strengthening, Alexei Egorov, an analyst at OAO Promsvyazbank in Moscow, said by phone.
“Speculators today are closing long positions, reaping profits,” Egorov said. “We’re entering a period of uncertainty as it’s not yet clear if Poroshenko plans to improve relations with Russia.”
The Ukrainian Equities Index rose 4.6 percent to 1,230.43, the highest in two years. The yield on Ukraine’s dollar Eurobond due July 2017 fell two basis points to 10.275 percent, the lowest since April 4. The hryvnia strengthened 0.3 percent to 11.9150 versus the dollar.