Micex Gains Before Ukraine Talks as VTB Climbs on State SupportKsenia Galouchko
The Micex stock index rose, paring the sharpest drop in more than two weeks, as Russia’s second-biggest lender climbed on a pledge of state support and investors speculated planned talks may ease tension in Ukraine.
The benchmark gauge increased 0.6 percent to 1,454.67 by the close in Moscow, trimming a 1 percent drop on Aug. 22. Of the 50 stocks in the index, 39 advanced, while 11 fell.
VTB Group climbed 2.1 percent to the highest in almost three weeks after the government said it plans to buy untraded preferred shares in the lender to bolster its capital after it was blocked from bond sales in Europe and the U.S. Peace plans are “on the table” for tomorrow’s talks between President Vladimir Putin and his Ukrainian counterpart Petro Poroshenko, German Chancellor Angela Merkel said Aug. 23.
“The Russian market’s attention is still focused on events in Ukraine,” Yuri Selyandin, a money manager who helps oversee about $2 billion at GHP Group in Moscow, said by phone. “Investors are hoping for the conflict’s de-escalation and all eyes are on tomorrow’s meeting. The main piece of news that’s supporting VTB is the fact that the Finance Ministry will invest in its equity.”
The Finance Ministry will invest 239 billion rubles ($6.6 billion) from the National Wellbeing Fund in shares of VTB and Russian Agricultural Bank, according to a government order.
State support for VTB means it “will have no issues with capital adequacy” to grow its business, Slava Smolyaninov, a strategist at UralSib Financial Corp., said in e-mailed comments.
Russia, which Ukraine and its allies blame for stoking the unrest, denies it’s involved in the conflict that has triggered sanctions from the U.S. and Europe and kept Russian stock valuations at the lowest among developing markets.
The Micex trades at 5.2 times estimated earnings, making it the cheapest among 21 emerging-market measures tracked by Bloomberg. That compares with a multiple of 5.3 at the end of February, before Russia’s incursion into Ukraine’s Crimea peninsula.
OAO Aeroflot gained 1.1 percent to 49.41 rubles after a report the nation’s biggest airline plans a new discount carrier.
OAO Magnitogorsk Iron & Steel increased 2.7 percent to 7.55 rubles. The company posted a second-quarter profit of $159 million on Aug. 22, compared with a loss of $79 million in the first quarter.
Moscow United Electric Grid Co. retreated 1.5 percent to 1.01 rubles. The company said today that its first-half net fell to 4.3 billion rubles from 7.3 billion rubles a year earlier.