High demand for risky assets, oil prices back Russian stocks

MOSCOW, Aug 8 (PRIME) -- Russian stocks increased on Monday because risky assets were still attractive after the Bank of England decreased the key rate by 0.25% and oil prices and global stocks rose, analysts said.

The MICEX rose 0.65% to 1,956.99 and the RTS increased 1.94% to 953.64.

“In general, external conditions are quite positive. Global markets are still rising after the Bank of England decreased the key rate last week and strong statistics of U.S. labor market was released. It should be noted that statements of some representatives of U.S. Federal Reserve System that the rate must be increased very gradually also support risky assets,” Forex Club’s analyst Irina Rogova said.

“Brent price is still rising… The main thing which supports it is expectations concerning data on U.S. reserves,” the analyst said, adding that rumors that some OPEC countries insist on resuming negotiations on oil output freeze also support the market, although it is unlikely to be a long-term driver of growth.

Veles Capital analyst Vasily Tanurkov said the dollar-denominated RTS outperformed the ruble-denominated MICEX, while a stronger ruble put under pressure exporters’ shares.

Vitaly Manzhos, a senior analyst at Bank Obrazovanie, said retailer Magnit, which rose 2.22% to 10,927 rubles, was still supported by strong results under International Financial Reporting Standards (IFRS) in January–June. Investors also expect the company will publish strong operating results for July on Tuesday.

Shares of the Moscow Exchange rose 2.67% to 117.94 rubles on the back of strong IFRS results in April–June, Manzhos said.

Power grid company Lenenergo jumped 6.9% to 5.34 rubles per common share and grew 5.6% to 36.75 rubles per preferred share because market players expect the company to pay high dividends for 2016 on preferred shares. Investors also welcomed the company’s plans to offer additional common shares at 6.99 rubles per security, the analyst said, adding that Lenenergo’s shares grew twofold since late June.

Automaker AvtoVAZ fell 0.61% to 8.1 rubles after the Association of European Businesses (AEB) said that the Russian car market fell 16.6% in July, Manzhos said.

Otkritie Broker Andrei Kochetkov said mobile operator MTS rose 1.5% to 250.9 rubles on the news that the company had sold problem assets in Uzbekistan.

The ruble strengthening, which was caused by a rise in oil prices, supported the financial sector, the analyst said. Top Russian lender Sberbank grew 0.55% to 139.45 rubles and the country’s second-largest bank VTB increased 0.64% to 0.06805 rubles.

The Russian stock market is likely to be influenced by Chinese and E.U. industrial statistics on Tuesday, Tanurkov said.

Below are the MICEX’ five most active stocks on Monday:

Company	Change, %	Last price, rbl	Trading volume, bln rbl
Sberbank	+0.55	139.45	6.062
Gazprom	+1.45	137.47	3.041
Magnit	+2.22	10927.00	1.671
Lukoil	+0.98	2842.50	0.977
Sberbank	+0.96	98.45	0.742

(65.5627 rubles – U.S. $1)

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