My profile:
Russia’s weighting in the MSCI Emerging Markets Index may increase with the possible addition of retailer , Magnitogorsk Iron & Steel Works and preferred shares of .
Magnit, the country’s second-biggest chain store, raised about $369 million from the sale of shares in the form of global depositary receipts, boosting the company’s free float to about 48 percent of shares outstanding, or almost $3 billion, said Peter Westin, chief strategist at Aton. The market capitalization of preferred shares of Sberbank is almost $2 billion after the stock soared more than fivefold, all of which is traded publicly, Renaissance Capital wrote in a report. Westin and RenCap had steelmaker Magnitogorsk, or MMK, on their MSCI candidate lists.
Magnit has “a good chance” of being included, and that along with other additions may raise Russia’s share in the emerging markets index, Westin said.
The benchmark MICEX, which was little changed Wednesday, has more than doubled this year as signs of a global economic rebound spurred demand for commodities, boosting the income outlook for Russia, the world’s largest energy supplier.
Credit growth in Russia may further drive equity returns, ING Groep said in an equity strategy report.
“Russia for now looks to be in a good position, given recovering commodity prices and debt markets, but may need to focus on generating long-term savings to fund mid-term growth,” ING said.
Magnit added 2 percent to $15.30 in London trading. The company reported that sales in October increased 22 percent from the same period last year as it added stores and Citigroup upgraded the stock to “buy” from “hold,” citing the global share sale and outlook for store openings.
Magnitogorsk rose 1.2 percent to 23.487 rubles on the MICEX. Preferred shares of Sberbank dropped 2.2 percent, 52.19 rubles. Even after Wednesday’s decline, the stock is up more than 470 percent this year, the biggest gain in the MICEX.
Sberbank’s preferred stock was removed from the MSCI country gauge a year ago after its capitalization dropped to $300 million, RenCap wrote in the report Wednesday. “It has since rebounded.” The stock stands “a very good chance” of returning to the index, according to the report.
MSCI was scheduled to announce changes to its indexes at 5 p.m. in New York on Wednesday. Changes to the MSCI indexes may cause shares that are chosen for inclusion to advance and those slated for deletion to drop as funds designed to mirror the benchmarks buy and sell stocks in accordance with those changes. Russia had a 6.7 percent weighting in the MSCI index of 22 developing countries as of Tuesday, according to the index provider.
