Russian Stocks Surge 17%

Russia’s Micex Index surged 17 percent, leading a rally in emerging-market stocks, as a U.S. government rescue of Citigroup Inc. boosted investor confidence and lifted commodity prices.

The 30-stock Micex jumped the most this month to 604.87 at 6:35 p.m. in Moscow, when trade was halted for the day because of the gains. Evraz Group SA, Russia’s second-biggest steel producer, soared 58 percent to $7.10 in London trading, its biggest gain ever. The supervisory board of state development bank Vnesheconombank approved Evraz’s application for a $1.8 billion loan, Vedomosti reported.

“The oil price and metals are going strong, and that always helps,” said Douglas Rohlfs, of international equity salesman at the Moscow-based Metropol brokerage. “The rally is on a strong global background.”

Companies in Russia, the world’s largest energy supplier, are leading gains after delivering the third-biggest losses for shareholders in the past three months among national equity benchmarks tracked by Bloomberg, as falling crude prices and the war with neighboring Georgia drove away investors.

The supervisory board of state lender Vnesheconombank, or VEB, agreed on the loan for Evraz on Nov. 21, Vedomosti said today, citing unidentified people close to the board, chaired by Prime Minister Vladimir Putin. Alexei Ivanov, Evraz’s head of investor relations, declined to comment on the report.

“The news looks great for the company if true, though we advise investors not to get carried away with emotions yet,” Troika Dialog analysts including Sergey Donskoy wrote in a note today.

OAO Rosneft, Russia’s biggest oil producer, added 21 percent to 100.41 rubles on the Micex Stock Exchange, while OAO Lukoil, the country’s second-biggest producer, jumped 16 percent to 900.92 rubles. Crude advanced as much as 7.5 percent to $53.65 a barrel in New York.

OAO Gazprom, Russia’s biggest company, climbed 20 rubles, or 22 percent, to 111 rubles, its biggest advance since October.

The dollar-denominated Russian Depositary Index, a measure of global depositary receipts trading in London, increased 29 percent. The gains wiped out the 14 percent decline for last week on the index.

Commodity producers helped drive emerging-market stocks higher, with the MSCI Emerging Markets Index rising 3.6 percent to 484.46 at 4 p.m. in London.

Petroleo Brasileiro, known as Petrobras, rose 12 percent to 18.95 reais. Goldman Sachs Group Inc. said investor concerns that the state-controlled oil company won’t have enough cash to finance its pre-salt oil exploration were “misguided.” Production from the so-called pre-salt areas, underwater oil fields beneath a layer of salt, is “scalable and flexible,” Goldman Sachs said.

Brazil’s Bovespa stock index rose 5.7 percent to 33,037.86, the most in three weeks. Saudi Arabia’s Tadawul index rose 6.2 percent to 4,529.19, after dropping 18 percent over the previous four days.

Hungary’s Budapest Stock Exchange added 6.1 percent and Turkey’s ISE National 100 Index advanced 9.5 percent.

The extra yield investors demand to own emerging-market government bonds instead of U.S. Treasuries fell 13 basis points to 7.48 percentage points, according to JPMorgan Chase & Co.‘s EMBI+ index.

Stocks rallied worldwide after Citigroup received a government guarantee on $306 billion of assets to help shore up investor confidence.

The bailout will “remove a big negative that has been weighing on sentiment,” wrote Chris Weafer, chief strategist at UralSib Financial Corp. in Moscow, in a note.

OAO RusHydro surged 13.8 kopeks, or 28 percent, to 63 kopeks. Russia may raise electricity prices 15 percent next year, Vedomosti reported, citing documents from the Federal Tariffs Service. The tariff for RusHydro, the state-controlled hydropower plant operator, may rise 44 percent, the most of all generation companies, because of its investment program, the Moscow-based newspaper said.

Deputy Energy Minister and former RusHydro Chief Executive Officer Vyacheslav Sinyugin said June 2 capital expenditures this year may reach a record 78 billion rubles ($2.8 billion) at RusHydro because the “era of cheap electricity is over.”

Author: Jo Amey