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Russian Stocks to Ruble Rally as Putin Orders Troop Pullback

By Vladimir Kuznetsov and Ksenia Galouchko May 19, 2014 1:16 PM GMT+0200

Russian stocks and the ruble extended last week’s rally as President Vladimir Putin ordered troops near Ukraine’s border back to base, signaling a possible easing of tensions before presidential elections in six days.

The Micex Index (INDEXCF) advanced 1 percent to 1,406.43 by 3:09 p.m. in Moscow after three consecutive weeks of gains. OAO Gazprom rose for the ninth day, adding 1.5 percent to 146.46 rubles per share in the stock’s longest rally since at least January 2006. The currency strengthened 0.7 percent to 40.2740 against the central bank’s target dollar-euro basket in Moscow. The bid yield on ruble-denominated debt due February 2027 fell six basis points to 8.97 percent.

Putin ordered forces in the Rostov, Belgorod and Bryansk regions to return to their bases after completing exercises, according to the presidential press service. Gazprom is surging as traders interpret Putin’s visit to China this week as a sign the country is close to a long-term gas-supply contract it has sought for a decade. Russian equities trade at 5.1 times estimated earnings, the lowest valuation among 21 emerging markets tracked by Bloomberg.

“Putin’s order to withdraw troops is a positive factor for the markets and will support asset prices,” Mansur Mammadov, a money manager at Kazimir Partners Ltd. in Moscow, which oversees $300 million in emerging-market equities, said by phone today. “This move signals de-escalation of the conflict.”