Micex Climbs to 2014 High as Goldman Bets on Equities
(Corrects company name in first subhead in story published Jan. 20.)
Russian stocks rose to the highest level this year as Goldman Sachs Group Inc. (GS) said equities are its “preferred asset” in the nation, offsetting concern China’s slowing growth may crimp commodity demand.
The Micex Index (INDEXCF) climbed 0.6 percent to 1,495.36 by the close in Moscow, trimming its drop this year to 0.6 percent. OAO Gazprom, the natural-gas export monopoly with the biggest weighting on the Micex at 14 percent, jumped 1.9 percent to 139.75 rubles.
Gazprom may increase natural gas deliveries to the European Union and add as much as $2 billion to operating profit as the Netherlands cuts output at its biggest deposit, according to Sberbank CIB. Goldman said it sees Russian growth improving in the coming quarters in a “more supportive external environment” and as financing becomes more accessible. The Micex fell 0.2 percent at the open after Chinese growth slowed to 7.7 percent in the fourth quarter from 7.8 percent.
“The Micex is ignoring Chinese data today,” Vladimir Bragin, head of research at Alfa Capital in Moscow, where he helps manage $2.9 billion, said by phone. “Energy producers are looking appealing.”
Low debt, improving growth and the prospects for slowing inflation will support the Russian equity market, Goldman analysts Clemens Grafe and Andrew Matheny said in an e-mailed note. “Given the weaker ruble, this is especially true for sectors that are geared to exports, which are dominant in the index.”
The ruble weakened for a third day against the central bank’s target basket of dollars and euros, losing 0.7 percent to 39.2072. Russia’s economy will expand 3.3 percent this year versus 1.5 percent in 2013, Renaissance Capital analysts Oleg Kouzmin and Charles Robertson said in an e-mailed note Jan. 16.
OAO Uralkali, the world’s biggest potash producer increased 1.9 percent to 185.90 rubles, the highest since Sept. 16, after CRU International and Argus FMB Potash said the company signed a contract with China at $305 a ton, according to reports today. Uralkali confirmed the reports in a statement after the market close. The stock surged 2 percent to $27.60 by 3:10 p.m. in London.
“This news brought clarity to what’s happening in the potash market since China is one of the main potash consumers,” Denis Gabrielik, an analyst at Otkritie Capital, said by phone from Moscow.
OAO M.video dropped 2.7 percent to 271.30 rubles, extending last week’s declines. Russia’s biggest electronics retailer said on Jan. 17 that 2013 sales rose 11 percent to 148.4 billion rubles from a year earlier, missing the 155 billion rubles average estimate in a Bloomberg survey. OAO Magnit, the nation’s biggest food retailer, tumbled 2.8 percent to 8,700 rubles today.
The dollar-denominated RTS Index (RTSI$) was steady at 1,394.49, extending this year’s retreat to 3.3 percent.
Russian equities have the cheapest valuations among 21 developing-nation economies monitored by Bloomberg, with shares on the benchmark Micex trading at 4.4 times projected 12-month earnings, compared with a multiple of 9.2 for the MSCI Emerging Markets Index.
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