A week ago these geniuses were proclaiming the Russian market dead an buried...now, they are forced to report on some hard data! Norilsk Jumps Most Since 2010 on ECB Stimulus: Russia Overnight (Bloomberg) -- Russian stocks surged in New York, led by OAO GMK Norilsk Nickel and OAO Lukoil, as the European Central Bank’s plan to boost stimulus encouraged investors to look for riskier assets. Shares of the world’s largest nickel producer jumped 9.3 percent to $16.17, the biggest gain since May 2010. American depositary receipts of Lukoil, Russia’s second-largest crude producer, added 5.7 percent to $44.24. The Market Vectors Russia ETF rose to the highest level in six weeks and Russian stocks trading in New York climbed for a second day after the Micex Index extended the world’s biggest advance this year. Russian companies followed rallies in European equities on speculation that the ECB’s measures will boost the euro area’s near-stagnant economy and increase sales from the world’s biggest energy exporter. The nation’s stocks trade at valuations that are less than half the global emerging-market average as rating companies may strip the country of its investment-grade status amid an oil-price slump and sanctions over the Ukraine conflict. “The ECB’s decision means that money will be cheaper and investors will have to buy something, so they are buying Russian equities, which are among the cheapest in emerging markets,” Sergey Pigarev, an analyst at Rye, Man & Gor Securities in Moscow, said by phone. “The ECB’s plan to expand stimulus will revive Europe’s economy, which might eventually lead to an increase in energy companies’ sales in the region.” More Cash The ECB committed to a quantitative easing program worth at least 1.1 trillion euros ($1.3 trillion) as part of a once-and- for-all push to counter declines in consumer prices by putting more cash in circulation. In the U.S., three rounds of Federal Reserve stimulus helped the Standard & Poor’s 500 Index more than triple from a bear-market low in March 2009. The U.S. central bank ended its easing program three months ago. Norilsk, which plunged 36 percent between a July high and the end of 2014, has gained 17 percent this year amid projections that the metal’s price will rise. Its ADR trades at 6.4 times 12-month earnings, about half its valuation two years ago. Lukoil is up 15 percent in New York this year after a 39 percent slide in 2014. The company will cut investments by $1.5 billion in 2015, Chief Executive Officer Vagit Alekperov said in an interview with Russian state TV channel Rossiya 24 from the World Economic Forum in Davos. It will probably delay a plan to list shares in Hong Kong, which is no longer realistic given the market, Alekperov said. Junk Grade The Russian rally may be short-lived, according to Aleksei Belkin of Kapital Asset Management LLC. Russia is on the brink of a recession after oil, which is the nation’s top export and, along with natural gas, accounts for about half its budget revenue, lost more than half its value since June. The ruble has tumbled 46 percent over the past six months amid financing restrictions and export bans imposed by the U.S. and its allies after President Vladimir Putin annexed Crimea. Putin denies any military involvement. “There are no long-term fundamental reasons for Russian equities to rally,” Belkin, who helps manage about $4 billion at Kapital, said by phone from Moscow. “The RTS index is at a level close to where it started to plunge in December, oil prices seem to stabilize but it’s not clear whether they will rebound, chances are high S&P is going to downgrade Russia to junk.” Moody’s Investors Service lowered the country to Baa3, one step above junk, last week. The credit grade, which matches those of Standard & Poor’s and Fitch Ratings, is on review for a further reduction, Moody’s said. Valuation Discount The Bloomberg Russia-US Equity Index of the country’s most- traded stocks in New York surged 3.5 percent to 53.19. It slumped 52 percent last year. The Market Vectors ETF jumped 5.7 percent to $16.30. Futures on the RTS gauge rose 0.5 percent to 81,480 in U.S. hours. The Micex trades at 5.2 times projected 12-month earnings, a 55 percent discount to the multiple for stocks on the MSCI Emerging Markets gauge, according to data compiled by Bloomberg. United Co. Rusal rose 0.4 percent o HK$5.12 at 10:54 a.m. in Hong Kong. “It was foreign investors who bought Russia today,” Oleg Popov, a money manager at April Capital in Moscow, said by phone. “Investors wanted first-tier companies with good reputation, high liquidity and broad recognition.” For Related News and Information:
Posted on: Fri, 23 Jan 2015 08:39:26 +0000
Trending Topics
Recently Viewed Topics
© 2015