KP Chemical, International Container Pace Share Gains on MSCI Index Review
LSR Group (LSRG), a St. Petersburg-based property developer, South Korea’s KP Chemical Corp. (064420), and International Container Terminal Services Inc. (ICT) jumped after MSCI Inc. (MSCI) said they will be added to benchmark indexes.
LSR rallied as much as 7 percent on inclusion in the Russia index and traded up 3 percent at 1,030 rubles by 12:51 p.m. in Moscow. OAO Rostelecom, the nation’s dominant long-distance carrier, and OAO Mechel preferred shares slumped at least 4 percent after they were not included. KP Chemical, a paraxylene maker that’s set to join the MSCI Korea Index, advanced 4.5 percent. International Container Terminal, the Philippines’ biggest port operator, surged 13 percent.
MSCI, which announced semi-annual changes to its gauges, estimates more than $3 trillion of funds are benchmarked against its indexes globally. Changes to indexes can alter share prices as passively managed funds buy and sell stocks to mirror the benchmark indexes.
“The inclusion news is positive for share moves,” Kim Chul Min, a Seoul-based quant analyst at Hyundai Securities Co. (003450), said by phone today. “Actual buying from passive funds will be more clearly seen on May 31.”
LSR replaced OAO OGK-4, E.ON AG’s power utility, in the MSCI Russia Index. Eight companies were included in the MSCI China Index and three were removed. Six were added to the MSCI India Index and none deleted. Twenty were cut from the MSCI Japan Index, with no stock added. The changes will take effect after the close of trading on May 31, MSCI said in a statement on its website.
“Contrary to our and market expectations, LSR Group’s liquidity was assessed sufficient, making the stock eligible for inclusion,” said VTB Capital analysts led by Alexey Zabotkin. Preferred shares of Mechel (MTLR), which were a “widely mentioned inclusion candidate,” failed to meet the criteria to be included.
OAO Polymetal jumped 4.5 percent, the most in a month, after the Russian gold and silver producer had its weighting increased in the MSCI Russia Index. OGK-4 slid 1.9 percent, dropping for a second day.
Rostelecom sank 5.5 percent to 168.17 rubles, snapping a seven-day streak of advances. Mechel’s preferred shares retreated 4.5 percent. Brokerages including Renaissance Capital, UralSib Financial Corp., Alfa Bank and Citigroup Inc. had forecast that the shares would be included in MSCI’s semi-annual review.
‘Surprised the Market’
“MSCI surprised the market this morning by including LSR into its Russia index and ignoring Rostelecom shares and Mechel prefs,” Leonid Slipchenko, an analyst at UralSib Financial Corp., said today. “We believe that Rostelecom may be included in the index later," he said, calling Rostelecom shares "fundamentally attractive" and recommending "using possible weakness in the stock as a buying opportunity."
The New York-based index provider is adding 54 securities and deleting 57 stocks from the MSCI All Country World Index. The three largest additions to the MSCI World Index are U.S.- based Whiting Petroleum Corp. (WLL), Walter Energy Inc. (WLT) and Green Mountain Coffee Roasters Inc. (GMCR)
The three largest additions to the MSCI Emerging Market Index are Shriram Transport Finance Co., an Indian truck financier backed by Fidelity Investments, South Africa’s Barloworld Ltd. (BAW), the world’s largest forklift trader, and synthetic rubber maker Korea Kumho Petrochemical (011780) Co.
Shriram Transport Finance rallied 3.6 percent, and Barloworld climbed 2.8 percent. Korea Kumho Petrochemical rose 0.9 percent. Hyundai Wia Corp., an auto-parts unit of Hyundai Motor Co., advanced 3.9 percent in Seoul after MSCI said it will be added to the Korean index. CSG Holding Co., a Chinese glassmaker that will be included in the MSCI China Index, climbed 2 percent.
Sapporo Holdings Ltd. (2501), Japan’s fourth-largest brewer, and Mitsui Mining & Smelting Co., the nation’s largest zinc producer, led declines in Tokyo among shares set for removal from the MSCI Japan Index.
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