Russian stocks advance as central bank cuts key rate

MOSCOW, Apr 28 (PRIME) -- The Russian stock market increased on Friday after a decision by the central bank to reduce the key rate and a release of a government order making all state companies pay 50% of their net profit in dividends, analysts said.

The MICEX grew 0.25% to 2,016.71 and the RTS rose 0.68% to 1,114.43.

“Purchases have continued on the Russian market on the back of an order by the prime minister to ensure payment of 50% of state companies’ net profit under International Financial Reporting Standards (IFRS) in dividends. Besides, the reduction of the key rate by the central bank by 0.5 percentage points to 9.25% annually supported the market moderately,” Finam analyst Timur Nigmatullin said.

He said that the central bank’s decision will reduce the cost of foreign debt servicing, firstly for non-oil and gas companies, and will raise revenue as consumer loans will become more affordable.

Andrei Kochetkov, an analyst at Otkritie Broker, said that a decision by the central bank to reduce the key rate was the Friday’s main event because it significantly affects the investment attractiveness of many securities.

Nigmatullin said that the external background was moderately negative during the session as the U.S. stock market futures and the European indices demonstrated marginal dynamics and the European markets’ increase was limited on the back of mixed corporate reports.

Mechel outperformed the market, surging 6.39%, as dividend payments will likely restart as the company earned a 7.13 billion ruble net profit for 2016, Kochetkov said

Gazprom continued rising as investors hope for higher dividends, he said.

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

Company	Change, %	Last price, rbl	Trading volume, bln rbl
Gazprom	+2.50	136.75	7.210
Sberbank	+0.31	165.20	6.771
Lukoil	-2.32	2818.00	2.957
FGC UES	+3.45	0.1964	2.455
ALROSA	+1.41	98.11	1.885

(56.9707 rubles – U.S. $1)

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