Russia Stocks Trim Weekly Declines as Gazprom to Lukoil Climb

Russian stocks rose, paring a retreat this week that sent the RTS Index into a bear market, as OAO Lukoil and OAO Gazprom gained.

The Micex Index added 0.6 percent to 1,384.66 by the close in Moscow, trimming this week’s drop to 3.5 percent. The dollar-denominated RTS, which fell 20 percent from its peak on Sept. 29, retreated 0.3 percent. Lukoil climbed 1.3 percent and Gazprom rose 1.2 percent. OAO Mobile TeleSystems slumped 10 percent as trading was restarted after being halted for almost two weeks during the company’s reorganization.

A drop in oil prices deepened the Micex’s discount to other emerging markets, with the gauge trading at 4.7 times estimated earnings, compared with 10.7 times for the MSCI Emerging Markets Index. The Micex’s 14-day relative strength index fell to 35.2 yesterday, near the level of 30 that to some analysts signals a security is oversold. It climbed to 38.2 today. The RSI for the RTS slid to 27.6 yesterday and was at 27.2 today.

“The market has been under pressure this week, we’re transitioning to a new reality of low oil prices,” Evgeny Loktyukhov, an analyst at OAO Promsvyazbank in Moscow, said by phone today. “The Russian market is cheap and is rebounding today. But stocks will remain under pressure because there aren’t any growth ideas.”

Brent, the nation’s main export earner, dropped 1.6 percent to $91.89 after sliding yesterday to the lowest in more than two years. Russia receives about half its budget revenue from oil and gas.

Oil Correlation

The RTS gauge’s 55-day correlation with Brent increased to 0.16 yesterday, the highest since the end of February, and was at 0.15 today, according to data compiled by Bloomberg. A reading of 1 implies two securities are trading in lockstep, while minus 1 signals the opposite.

The last time the RTS Index fell 20 percent from its peak, entering what’s classified as a bear market, was in March when President Vladimir Putin’s annexation of Ukraine’s Crimea peninsula triggered the worst standoff with the U.S. and its allies since the Cold War.

Yandex NV rose 3.8 percent after tumbling 8.5 percent during the previous two days on concern its business may be hurt if the government regulates the Internet more tightly.

Russian U.S.-based exchange-traded funds received $20.8 million of inflows yesterday, data compiled by Bloomberg show. Russian equity funds had $157 million inflows in the week ended Oct. 1, according to an e-mailed note by Sberbank CIB analysts that cited EPFR Global data.

The number of Micex shares trading above their 50-day moving average dropped to 17 yesterday, the fewest since Aug. 12, from 30 a day earlier, data compiled by Bloomberg show.

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