BLBG:Russian Stocks Advance as Urals Crude Hits Eight-Week High
Russian stocks rose, extending last week’s gain, as Urals crude oil reached an eight-week high.
The 30-stock Micex (MICEX) index advanced 0.2 percent to 1,443.68 as of 1:56 p.m. in Moscow, after climbing 2.7 percent last week. Oil producers OAO Lukoil and OAO Tatneft both gained. The dollar-denominated RTS index climbed 0.4 percent to 1,428.85.
Urals crude (EUCRURNW), Russia’s chief export earner, gained 0.3 percent to $111.56 per barrel, the highest intraday price since Nov. 17, as concern over supply disruptions caused by growing tension in Iran and strikes in Nigeria countered speculation Europe’s debt crisis will hold back demand. The commodity has gained 5.6 percent so far this year.
“Rising oil set against even a stable global backdrop can add significant outperformance to Russian assets,” Chris Weafer, chief strategist at Troika Dialog in Moscow, wrote in an e-mailed note.
German Chancellor Angela Merkel and French President Nicolas Sarkozy are meeting for the first time this year today to flesh out a new rulebook for fiscal discipline negotiated at a Dec. 9 summit that seeks to create a “fiscal compact” for the 17-member euro area. The European Union is Russia’s largest trading partner.
“For Russia, Europe remains a question mark, and then there are also the country’s own political uncertainties,” John-Paul Smith, a London-based emerging-market strategist at Deutsche Bank AG, said in an interview. “Russian stocks are cheap, but there are structural impediments for translating that cheapness into tangible shareholder returns.”
The Micex index (INDEXCF) trades (INDEXCF) at 5.4 times analysts’ estimates for member companies, the lowest among the biggest emerging markets including Brazil, India and China.
Lukoil gained 0.9 percent to 1,756.50 rubles, and Tatneft climbed 0.7 percent to 171.58 rubles. United Co. Rusal, the world’s largest aluminum producer, fell 1.5 percent to 190.23 rubles.
Russian markets are open during the country’s New Year holiday that lasts until Jan. 10. A total 17 billion shares were traded on the Micex Jan. 6, compared with a daily average of 46.7 billion stocks last month, according to data (MICXVOL) compiled by Bloomberg.
To contact the reporter on this story: Jack Jordan in Moscow at jjordan22@bloomberg.net
To contact the editor responsible for this story: Gavin Serkin at gserkin@bloomberg.net
