Russia Stocks Trim Quarterly Drop as Deutsche Lifts Rusal

Russian stocks gained for the first time in four days, paring this quarter’s drop, as exporters climbed and Deutsche Bank AG raised United Co. Rusal to buy.

The dollar-denominated RTS Index, which slid into a bear market yesterday for the second time this year, added 0.5 percent to 1,132.08 by 2:54 p.m. in Moscow. The Micex Index climbed 0.7 percent to 1,417.65, led by a 1.4 percent advance in natural gas exporter OAO Gazprom. Rusal rallied 3.4 percent as Deutsche Bank said the weaker ruble and improved aluminum-price forecasts benefit the world’s biggest producer of the metal.

The RTS’s 17 percent slide this quarter, the worst in three years, pushed its 14-day relative strength index to 32 yesterday, just shy of the 30 level that signals to some analysts a security is oversold. Russian shares, under pressure from U.S. and European sanctions, retreated after AFK Sistema’s billionaire owner Vladimir Evtushenkov was put under house arrest Sept. 16 amid a probe into alleged money laundering.

“We’re seeing a small market rebound after earlier losses, but this isn’t a turning point,” Andrey Vashevnik, who manages $25 million as chief investment officer at R&B Investment Fund Ltd. in Moscow, said by phone. “Even if sanctions are curbed, the market outlook is still negative since for strong growth. We need positive economic news.”

The European Union may review sanctions against Russia today, Kommersant reported Sept. 23, citing an unidentified EU official. The economy will expand 0.3 percent in 2014, according to a Bloomberg survey of economists, the slowest pace since it shrank 7.8 percent in 2009.

Equity Inflows

Rusal is the best-performing stock on the Micex this year, more than doubling in value as the gauge lost almost 6 percent. The company is also benefiting from an increase in the valuation of OAO GMK Norilsk Nickel, Deutsche Bank said. Norilsk added 0.8 percent today.

Russian U.S.-based exchange-traded funds received $35.7 million of inflows yesterday, with $36 million going into Market Vectors Russia ETF, data compiled by Bloomberg show

The ruble strengthened for the first time in four days against the central bank’s dollar-euro basket today, rising 0.2 percent from a record low to 44.1162. The currency’s 14 percent slide versus the dollar this quarter is the biggest among global currencies tracked by Bloomberg.

Sistema, which has lost two-thirds of its market value this month, declined 0.3 percent to 12.64 rubles, reversing an earlier gain of as much as 8.6 percent. The stock slid 25 percent yesterday after a court ruled that the investment company be blocked from receiving dividend payments from its oil unit OAO Bashneft.

Bear Market

Investors have drawn parallels between the case against Evtushenkov and the 2003 arrest of Mikhail Khodorkovsky, which preceded the dismantling of his Yukos oil company. Prosecutors last week filed suit to regain state ownership of Bashneft from Sistema in a claim linked to alleged violations during the state’s sale of the oil producer.

The last time the RTS fell 20 percent from its peak, classified as a bear market, was in March as President Vladimir Putin’s annexation of Ukraine’s Crimea peninsula sparked the worst standoff with the U.S. and its allies since the Cold War. The number of Micex shares trading above their 50-day moving average fell to 31 yesterday from 35 a day earlier, data compiled by Bloomberg show.

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