Russia’s Micex extends weekly advance as Magnit, Lukoil Gain
The gauge added 0.3 percent to 1,499.82 by the close in Moscow, capping a 0.7 percent gain in the week. Magnit, the nation’s biggest grocer, jumped for a fifth day to a record. OAO Mechel fell 10 percent after the government indicated it may let the mining company go bankrupt. Lukoil rose 0.6 percent.
The Micex, which has rallied 21 percent from this year’s trough on March 14, has entered a bullish technical formation known as the golden cross, which occurs when a security’s short-term moving average breaks above its long-term moving average. Three weeks after the government said it was working on a plan to bail out Mechel, Industry and Trade Minister Denis Manturov said yesterday bankruptcy is a possibility, though the ministry doesn’t support the option, RIA Novosti reported.
“Magnit is one of the best stories in the Russian market and it surprised me again by rising to new highs,” Oleg Popov, who helps oversee $1 billion at Allianz Investments, the asset-management arm of Europe’s biggest insurer, said by phone. “The fact that the Russian market is holding up at these levels without falling speaks of the market’s strength.”
Lukoil, which has a 14 percent weighting in the gauge, extended a gain of 2 percent this week. Lukoil’s ex-dividend date is today, July 14, according to data compiled by Bloomberg.
Debt Struggle
Magnit rose 1.3 percent to 9,890 rubles, extending this week’s gain to 6.9 percent, after reporting June revenue jumped 33 percent. Consumer staples stocks on the Micex rose an average 1.3 percent today.
Mechel, Russia’s biggest coking coal producer, has dropped 25 percent over four days and 42 percent this year as it struggles with about $9 billion of debt. The company is in talks to restructure the debt with Vnesheconombank, OAO Gazprombank, OAO Sberbank and VTB Bank. The 14-day relative strength index for Mechel was at 24.8 today, below the level of 30 that to some analysts signals a security is oversold.
“Investors continue to sell Mechel amid fears of a bankruptcy,” Anvar Gilyazitdinov, who manages a $10 million portfolio of Russian stocks at Rye, Man & Gor Securities, said by phone from Moscow. “Magnit posted good results this week and the retail sector is at the centre of investor attention.”
The index’s 50-day moving average rose to 1,445.36, above the 200-day moving average of 1,444.21, according to data compiled by Bloomberg. Out of 50 shares on the bourse, 22 dropped and 28 rose. The dollar-denominated RTS Index (RTSI$) closed little changed at 1,383.18.
Russia-focused equity funds posted $52 million in outflows in the week ended July 9, UralSib Capital said in an e-mailed note, citing EPFR Global data.
“There are no triggers for the Russian market at the moment,” Vladimir Bragin, head of research at Alfa Capital Partners Ltd. in Moscow, said by phone.
source: businessweek.com
