Jason Corcoran, Ksenia Galouchko

Russian (INDEXCF) equities rallied as natural- gas producers OAO Novatek and OAO Gazprom climbed.

The 50-stock Micex Index gained 0.2 percent to 1,481.44 by 2:54 p.m. in Moscow after dropping 0.7 percent earlier. Gazprom, Russia’s natural gas export monopoly and largest company, erased earlier declines, rising 0.7 percent. Novatek increased as much as 1.5 percent.

Gazprom’s board approved 2013 investments at 705.4 billion rubles ($22.9 billion), less than this year’s investment program of 975 billion rubles. The company has the largest weighting on the index at 14 percent. Novatek climbed after Kommersant reported Russia’s Energy, Finance and Natural Resources ministries, as well as the Federal Antimonopoly Service support the company’s bid to end Gazprom’s liquefied natural gas export monopoly. Novatek has the seventh-largest weighting on the index at 4 percent.

“This is very positive news for Novatek,” Mark Rubinstein, head of research at IFC Metropol, said by phone. “Currently Novatek exports LNG through Gazprom and has to pay them a fee, while this would allow them to save on export expenses.”

The amount of Gazprom shares traded was 20 million, equivalent to 60 percent of the three-month average. Novatek increased 1.3 percent to 349.05 rubles, the second-biggest gainer on the index.

Putin, TNK-BP

OAO Rosneft, Russia’s largest oil producer, dropped 0.3 percent to 261.58 rubles. OAO TNK-BP Holding retreated 0.6 percent to 57.40 rubles. The Russian government is in talks with billionaire partners in the TNK-BP oil venture about investing all or some of proceeds from the sale of their half of the company in Russia, President Vladimir Putin told reporters in Moscow today.

BP Plc and AAR, which represents the U.K. explorer’s billionaire partners in the venture, signed separate binding agreements this year to sell their halves of it to Rosneft.

Russia should seek agreements with offshore zones to compel disclosure of tax information and help reveal the main beneficiaries of companies, Putin said. The nation also needs to refine its legislation to better safeguard the interests of business owners and improve Russia’s investment climate, he said.

Russian capital outflow in 2012 is seen at between $65 billion and $67 billion, Central Bank Chairman Sergei Ignatiev told reporters in Moscow on Dec. 19.
VTB Earnings

VTB Group, Russia’s second biggest lender, retreated 0.2 percent to 5.47 kopeks after rising as much as 0.8 percent ealier. The amount of shares traded was 24 billion, equivalent to 74 percent of the three-month average. The bank may sell new shares next year, chief financial officer Herbert Moos told reporters today.

Net income attributable to shareholders rose to 23.4 billion rubles ($760 million) for the three months through Sept. 30, from 20.4 billion rubles a year earlier, Moscow-based VTB said today in a statement. That beat an average estimate of 19.7 billion rubles from 15 analysts surveyed by the lender.

Oil slid as much as 0.6 percent to $89.42 a barrel in New York. Russia receives about half of its budget revenue from oil and natural gas sales. The country’s markets are closed for New Year and Christmas holidays in the first week of 2013.

Khodorkovsky Sentence

Standard & Poor’s GSCI Index dropped 0.3 percent to 643.06. The RTS Index rose 0.1 percent to 1,519.02.

“Investors are taking a breather after strong gains on markets over the past few weeks as a seasonal recess in trading activity nears,” Slava Smolyaninov, an equity analyst at UralSib Financial Corp., said in an e-mailed report today.

Mikhail Khodorkovsky, once Russia’s richest man, will be freed from prison in 2014 after his second sentence for fraud and tax evasion was reduced by two years, the Interfax news service reported today.

A Moscow court cut the former Yukos Oil Co. billionaire’s sentence to 11 years from 13 years, the Russian news service reported today.

The Bloomberg Russia-US stocks gauge declined 0.9 percent to 97.82 yesterday, trimming its advance this year to 8 percent. The Market Vectors Russia ETF (RSX), the biggest U.S. exchange traded fund that holds Russian shares, dropped 0.8 percent to $29.61, while the RTS Volatility Index gained 1.6 percent to 21.08 points.

The Micex trades at about 5.4 times estimated earnings after adding 5 percent this year. That compares with a multiple of 10.7 times for the MSCI Emerging Markets Index, which has gained 14.5 percent.

Russian equities have the lowest valuations based on estimated earnings among 21 emerging markets tracked by Bloomberg.

http://www.bloomberg.com/news/2012-12-20/russia-stocks-slide-2nd-day-as-oil-falls-on-u-s-budget-concern.html