Russian Stocks, World’s Best, Extend Rally on UBS Forecast, Oil
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By William Mauldin
June 1 (Bloomberg) -- Russian stocks gained the most among equity markets worldwide after UBS AG said the rally that almost doubled share prices this year hasn’t “run out of steam” and oil climbed to a seven-month high.
OAO Sberbank surged 8.9 percent after UBS recommended buying shares of the nation’s biggest bank, saying it has become “more comfortable with risks in the financial industry.” OAO Rosneft and OAO Lukoil, Russia’s biggest oil producer, advanced more than 5 percent as oil increased for a sixth day.
The 50-stock RTS added 5.8 percent to 1,150.39 at 12:23 a.m. in Moscow, the most in almost two months. The dollar- denominated RTS has rallied 82 percent this year, trailing the 90 percent jump in Peru’s Lima General Index among 91 gauges tracked by Bloomberg. The ruble strengthened as much as 1.1 percent to 30.6243 per dollar today, the highest since Jan. 9.
“The Russian market rally has been strong, and we feel it has not run out of steam,” wrote UBS analysts led by Dmitry Vinogradov in Moscow in a report dated today, saying the market may rise another 30 percent this year. “Following the strong rally by exporters, we now recommend starting to rotate into domestic names, which should benefit from any economic upturn and strengthening currency.”
Russia, the world’s largest energy supplier, will probably be back on a sustainable growth path in the third quarter, possibly even in the second, UBS AG economist Clemens Grafe wrote in a separate report.
“The trough is behind us,” Grafe wrote.
Banks Upgraded
Sberbank, the biggest holder of ruble deposits, jumped 8.9 percent to 48.14 rubles as the ruble strengthened and UBS upgraded its recommendation on the shares to “buy” from “neutral.” A stronger ruble encourages Russians to keep savings in local-currency deposits, Sberbank’s main source of funding.
Bank Vozrozhdenie, a Russian lender that focuses on small- and medium-sized companies, gained 2.2 percent to 560 rubles. UBS raised its recommendation on the stock to “buy” from “neutral.”
Lukoil jumped 5 percent to 1,723 rubles, up 113 percent this year. Rosneft, the nation’s biggest oil company, advanced 5.9 percent to 218.66, bringing this year’s rally to 98 percent.
Oil, Russia’s main export earner, has more than doubled from this year’s low in January on speculation the worst of the economic crisis that led to recessions in Europe, Asia and the U.S. is over. Crude for July delivery increased as much as $1.19 to $67.50 a barrel as China’s manufacturing expanded for a third month and the nation raised fuel prices.
Russia’s manufacturing industry contracted at the slowest pace in seven months in May as a decline in new export orders eased and companies cut staff at a weaker pace, VTB Capital said.
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