Russian stocks opened the trading year in Moscow with a bang Monday and the ruble rocketed to its biggest one-day gain against the dollar in a decade, driven by $80 oil, positive economic news and investor enthusiasm for global markets.
The gains came as the opening bell rang, following a 5.3 percent increase for Russian Global Depositary Receipts on the London Stock Exchange during the first 10 days of the year. The ruble-denominated MICEX Index jumped 5.5 percent, closing up 74.77 points at 1444.78, while the dollar-denominated RTS Index rose 7.5 percent, or 108.45 points, to 1553.06.
The high price of oil, the lifeblood of the Russian economy, drove Monday’s rally, analysts said. Spot prices for Urals crude slid 0.7 percent on Monday, dipping to $79.83, but were still 4.3 percent higher than on Dec. 31.
Increases in China’s imports and exports, combined with demand for fuel in winter-bitten Europe and the United States, pushed oil to its highest price in months. The market has also been watching an uneasy standoff between Moscow and Minsk over a new oil supply contract for 2010.
The higher oil price “explains most of the strong openings” in the Russian bourses, said Elina Ribakova, chief economist at Citibank. “The stock market is beginning to price in the growth effect of the oil price” on the Russian economy, she said.
Those heightened expectations for the economy will mean “stronger performance” and higher numbers for the MICEX and RTS this year, she said.
Both bourses posted 52-week highs.
Demand for oil and other raw materials is good news for Russia’s commodity-based economy, said Philip Townsend, head of research at Metropol. Monday’s stock surge “is a correction” for Russian companies, he said.
The flow of investment into emerging and global markets in general also provided a boost to Russia’s stocks. Following the contractions of 2008 and 2009, investors are putting money back into equities, said Vladimir Savov, head of research at Otkritie.
Investor sentiment appears to be bullish, with a prevailing sentiment “that 2009 is over, so 2010 must be, by definition, a bit better,” he said, noting that companies listed in Russia were “catching up with what the stocks are already doing in New York and London.”
And while oil was on analysts’ minds, mining stocks put up most of the biggest gains. Severstal rose 19.9 percent and Norilsk Nickel gained 10.9 percent, helping push the MICEX’s index of 10 metals and mining stocks up 9.4 percent. The exchange’s oil and gas index slightly lagged the market, rising 5 percent.
Meanwhile, the ruble put on no less of a show, increasing 3.1 percent to 29.3045 per dollar, its biggest one-day jump since March 1999, according to Bloomberg.
Townsend predicted the ruble would not advance much more against the dollar in 2010, saying the currency would hover at about 28 per dollar this year. A Vedomosti survey of 15 bankers and analysts conducted last month generated a median ruble/dollar rate prediction of 28.5, with a range of 26.2 to 33.