Russian Stocks Advance Most in World on Higher Oil; Ruble Gains
By William Mauldin and Emma O’Brien
March 10 (Bloomberg) -- Russian stocks rallied, posting the biggest gain among global equity markets, and the ruble jumped to the highest in three weeks as oil rose for a third day, bolstering the outlook for the nation’s economy.
OAO Rosneft, the country’s biggest crude producer, advanced more than 9 percent. The 30-stock Micex Index added 8.2 percent to 745.37 at 4:50 p.m. in Moscow, the most among national benchmarks tracked by Bloomberg. Stocks gained in the U.S. and Europe after Citigroup Inc.’s profit outlook spurred speculation the worst of the banking crisis is over.
Oil rose today before a report that will probably show U.S. inventories declined, reinforcing speculation production cuts by OPEC, which meets in Vienna on March 15, are draining stockpiles. Russia, the world’s largest energy supplier, is bracing for its first recession since 1998 as oil’s retreat from a record in July and the worst global financial crisis since the Great Depression cut revenue from exports.
“Oil is popping up as another investment theme before the OPEC meeting,” said Zina Psiola, who manages about $220 million in Russian equities at Clariden Leu AG in Zurich. “We’ll probably have a good spell” for Russian stocks for a few days, she said.
The Organization of Petroleum Exporting Countries has lowered output three times since September to combat price declines. Crude has gained 25 percent in New York trading in the past month.
Rosneft climbed 9.1 percent to 141.81 rubles on the Micex Stock Exchange. OAO Lukoil, the country’s second-biggest oil producer, added 5.7 percent to 1,263.43 rubles.
Sberbank, VTB
OAO Sberbank, the biggest holder of ruble deposits, climbed 7.5 percent to 17.01 rubles. VTB Group, Russia’s second-largest, jumped 16 percent to 2.55 kopeks.
The ruble advanced 1.4 percent to 39.2773 against the dollar-euro basket by 5 p.m. in Moscow, its highest close since Feb. 13. It may strengthen another 4 percent in the next few months should oil prices continue to rise, said Evgeniy Nadorshin, senior economist at Moscow’s Trust Investment Bank.
Russia’s benchmark 7.5 percent dollar bond due 2030 climbed the most in three weeks, pushing the yield down 16 basis points to 9.735 percent, according to Bloomberg data.
Russia spent more than a third of foreign-exchange reserves since August stemming a 34 percent depreciation against the dollar as crude retreated from a record in July.
Low Valuations
The Micex has dropped 34 percent in the past six months, with shares trading near their cheapest relative to earnings since Bloomberg records began in 2003. The dollar-denominated MSCI Russia Index, which tumbled 56 percent in six months, trades at 2.9 times reported profit, near the all-time low of 2.3 times earnings in 2001, Bloomberg data show. That’s less than a third of the price-earnings multiple of 8.5 for the MSCI benchmark of emerging economies, and a quarter of the 10.3 times earnings for companies in the MSCI World Index of developed markets.
The advance in Russian equities is “set to continue” as exporters benefit from a cheaper ruble and stocks begin to “catch up” with other markets on valuations, UBS AG wrote in a strategy note today.
OAO Uralkali, Russia’s second-biggest potash producer, jumped 27 percent to 68.59 rubles. Uralkali said in a statement it agreed to pay 7.8 billion rubles ($223 million) in total costs relating to a 2006 flood at one of its mines. The Vedomosti newspaper earlier reported that Uralkali might have paid as much as 20 billion rubles.
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