9 October 2013

Bloomberg 08.10.2013 Yuri Selyandin's commentary "Russia Stocks Climb 4th Day on Oil as Metal Shares Advance"

Russian stocks advanced for a fourth day as crude oil, the country’s main export earner, increased and metal producers gained.

The Micex Index (INDEXCF) added 0.3 percent to 1,485.21 by 12:35 p.m. in Moscow. OAO Magnitogorsk Iron & Steel jumped 1.3 percent to 8.053 rubles. OAO Mechel (MTLR) rose 0.9 percent to 103.50 rubles.
Crude oil increased 0.3 percent to $103.34 in New York.

Russia receives about half of its budget revenue from the oil and natural-gas industries. Most metals gained in London, while Standard & Poors GSCI Commodities Index rose 0.2 percent. Russian equities have the cheapest valuations among 21 emerging economies monitored by Bloomberg, with shares on the index trading at 4.4 times projected 12-month earnings, compared with a multiple of 10.5 for the MSCI Emerging Markets Index.

“Oil is trading at comfortable levels for Russia,” Yuri Selyandin, a portfolio manager who helps manage about $2 billion at GHP Group in Moscow, said by phone. Our market is one of the most undervalued global markets.
OAO Novatek gained 0.7 percent to 389.55 rubles. OAO Bashneft, a regional oil producer, rose 0.8 percent to 1,909.90 rubles.

Novateks net income will double over the next three years on earnings from its crude oil business and dividend streams from joint ventures, analysts at Sberbank CIB said today in an e-mailed note, raising the price estimate for its global depositary receipts to $188. Sberbanks other best long-term investment stocks include Eurasia Drilling Co. Ltd, Bashneft, OAO Surgutneftegas preferred shares and OAO Gazprom Neft, according to the note.

OAO, Russias biggest electronics retailer, jumped 1.7 percent to 275 rubles. Ten-day price swings on the Micex retreated to 12.491 from 13.565 yesterday. The dollar-denominated RTS Index (RTSI$) gained 0.2 percent to 1,447.40.

With U.S. borrowing authority set to lapse Oct. 17, President Barack Obama reiterated that he wont negotiate with Republicans over raising the debt limit or reopening the government. Senate Democrats are planning a test vote before the end of this week on a measure that would grant Obama authority to raise the $16.7 trillion debt ceiling, probably for a year unless two-thirds of both chambers of Congress disapprove.
Investors still believe that U.S. officials will find a solution in time, Selyandin said.

Source: Bloomberg BusinessWeek 08.10.2013