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Bloomberg 25.06.2014 Yuri Selyandin's comment on Micex Rallies With Ukraine Debt as Putin Tempers Threat of Force

Russian stocks jumped to an eight-month high and the ruble rose as President Vladimir Putin asked lawmakers to cancel approval to use force against Ukraine. The former Soviet republic’s bonds soared the most since March.
The Micex Index increased 2.2 percent to 1,518.83 by the close in Moscow, the highest since Oct. 22 and the most among 19 emerging markets tracked by Bloomberg. The ruble rose 1 percent versus the central bank’s dollar-euro basket to 39.2634 by 6 p.m., the strongest since Jan. 20. Ukrainian Eurobonds due July 2017 climbed the most since March 27, sending the yield down 125 basis points to 8.42 percent, while Russian local-currency debt maturing in 2027 climbed for a second day.
Russian stocks and the ruble gained the most among major markets worldwide as Putin’s request for the upper house of parliament to rescind the March 1 resolution eased concern the U.S. and European Union will impose harsher sanctions. Pro-Russian rebels in eastern Ukraine last night called a cease-fire in fighting against government forces, matching a truce four days ago announced by President Petro Poroshenko.
“Today’s news is marvelous,” Andrey Vashevnik, who manages $25 million as chief investment officer at R&B Investment Fund Ltd. in Moscow, said by e-mail. “The risk of war is decreasing, the market is celebrating, the risk of sanctions is falling.”
Penalties on individuals and companies imposed by the U.S. and EU after Putin’s annexation of Ukraine’s Crimea peninsula in March have exacerbated an economic slump in the world’s biggest energy exporter.

Gazprom Gains

OAO Gazprom, Russia’s largest energy producer, advanced 4.1 percent, the highest since Oct. 22, and OAO Sberbank, the biggest lender, increased 3.4 percent, the most since May 7 on a closing basis. OAO Alrosa, a diamond producer, surged 5.6 percent after first-quarter revenue rose 43 percent from a year earlier.
Ukraine, a key route for Russia’s energy exports to Europe, owes Gazprom $4.46 billion for gas already supplied. The country said last week Russia cut natural-gas supplies after demanding fuel payments be made in advance. Gazprom’s Eurobonds maturing in July 2022 jumped the most in almost three weeks, sending the yield 16 basis points lower to 4.99 percent.
“Over the past months, it was specifically the Ukraine factor that prevented investors from buying the Russian markets,” Yuri Selyandin, a money manager who helps oversee about $2 billion at GHP Group in Moscow, said by phone. “It’ll now be difficult for the EU and U.S. to impose sanctions. The risks for the Russian economy and markets are declining.”

Mobius Call

The Micex entered a bull market June 6 after rising more than 20 percent from a low on March 14. The dollar-denominated RTS Index jumped 3.8 percent today, the most among more than 90 equity gauges monitored by Bloomberg. The main stock index in Kiev climbed 0.6 percent.
Mark Mobius, who oversees about $50 billion as executive chairman of Templeton Emerging Market Group, said the outlook for Russian and Ukrainian equities was positive. The Micex trades at 5.5 times estimated earnings, the lowest valuation of 21 emerging markets tracked by Bloomberg.
“Despite the recent disturbances, both economies are functioning and since the price of companies has come down, there are opportunities to purchase stocks at reasonable valuations,” Mobius said in e-mailed comments to Bloomberg News.
Putin’s request came before a visit to Vienna today to help stabilize the situation in Ukraine, Dmitry Peskov, the president’s spokesman, said by telephone. The Federation Council authorized Putin on March 1 to use the military in Ukraine. The ruble jumped 1.1 percent to 33.7625 per dollar, the best performance among 24 emerging-market currencies tracked by Bloomberg, and added 0.9 percent versus the euro.
“The move will calm down Western/Ukraine hawks,” Dmitry Polevoy, chief economist for Russia and CIS at ING Groep NV in Moscow, said in an e-mailed note. “Equities and the ruble may see relatively higher potential for price growth.”
http://www.bloomberg.com/news/2014-06-24/russia-s-micex-index-rises-on-ukraine-cease-fire-alrosa-jumps.html