U.S.-Traded Russian Equities Rise on Stimulus Outlook, Oilby
ETF gains as Draghi hints at new stimulus amid growth concern
Energy-heavy ETF advances as oil rebounds from three-week low
U.S.-traded Russian equity assets rallied as prospects for more monetary stimulus in Europe boosted demand for riskier assets and oil prices rebounded.
The Market Vectors Russia ETF, the biggest exchange-traded fund tracking the country’s stocks, advanced 1.7 percent to $17.13 in New York, widening this year’s gain to 17 percent. Wireless carrier VimpelCom Ltd. rose 6.7 percent, the best performance among American depositary receipts. Mechel OJSC, the mining company that is seeking to avert bankruptcy, jumped 2 percent.
Stocks rose as European Central Bank President Mario Draghi said on Thursday that policy makers will investigate fresh stimulus measures, diminishing global growth concern and luring investors to return to some of the cheapest equities in emerging markets. Russian energy companies, which account for about 43 percent of the Market Vectors Russia ETF’s assets, rallied as Brent crude rose from a three-week low in London.
“For the Russian market, heavily dependent on oil, the price of Brent remains the key driver,” Vladimir Vedeneev, chief investment officer of Raiffeisen Asset Management in Moscow, said by phone on Thursday. “There’s also speculation that an expansion of the stimulus policy in Europe can potentially lead to an increase in risk appetite among emerging markets in general, and Russia in particular.”
Russia’s benchmark Micex Index trades at 5.7 times projected 12-month earnings, the cheapest among emerging-market peers, data compiled by Bloomberg show. The Bloomberg Russia-Us Equity Index rose 1.1 percent to 50.63 in the biggest advance in a week.
Draghi said in Malta that the ECB will re-examine the degree of stimulus in December, adding that its quantitative-easing program may continue until beyond September 2016 if needed.
Brent crude rose 0.5 percent to $48.08 a barrel. The ruble advanced 0.7 percent against the dollar, widening its gain in the past two months to 11 percent. The best-performing currency in emerging markets in the past two months is still down 6.2 percent this year.
“We are seeing the ruble advance amid a stabilization in oil, but we remain relatively pessimistic on the the outlook for the country’s financial assets,” Liza Ermolenko, a London-based analyst at Capital Economics Ltd., said by phone on Thursday. “A weak growth outlook is still here, and lower growth will mean additional pressure on the currency.”
VimpelCom increased to $4.01. Russia’s third-largest wireless carrier has lined up banks and advisers as it explores options including a sale or an initial public offering for about 50,000 phone towers, people with knowledge of the matter said Wednesday. Mechel rose to 87 cents. Futures contracts on the RTS Index expiring in December rose 0.6 percent to 86,620 in U.S. hours.
Moscow-based aluminum producer United Co. Rusal added 1 percent to HK$3.09 at 10:50 a.m. in Hong Kong.