Azernews.Az

By Bloomberg

The biggest exchange-traded fund tracking Russian stocks posted its best weekly gain since since February amid signs the country’s economic crisis is easing as oil prices stabilized and a cease-fire in Ukraine continued to hold.

The Market Vectors Russia ETF jumped 3.8 percent to $18.40 in New York on Thursday, pushing the gain since March 27 to 11 percent. U.S.-traded Russian stocks jumped for a third straight week. U.S. markets are closed for a holiday Friday.

Russian assets rallied as data showed on April 1 that gross domestic product expanded 0.4 percent in the fourth quarter after analysts predicted no growth. While the economy is still forecast to shrink 4 percent in 2015 amid lower oil prices and sanctions linked to the Ukraine conflict, Brent crude has held around $55 a barrel for two weeks and hostilities have eased. German Chancellor Angela Merkel said this week that the situation had become “calmer” in the former Soviet Republic.

“Many people still underweight Russia, and they now may feel a little bit naked as the market is one of the most impressive gainers globally this year,” Mattias Westman, the London-based founder of Prosperity Capital Management, which manages about $2 billion in Russian assets, said by phone Thursday. “Things look more calm in Ukraine, the ruble is gaining and fears of capital control are going away. The risk of escalation in Ukraine still remains, but there is an equal chance that the situation will improve further.”

Surgut, Rosneft

The Bloomberg Russia-US Equity Index increased 5.5 percent this week to 60.13. OAO Surgutneftegas, Russia’s third-biggest oil company by output volume, jumped 14 percent to $8.18. The state-controlled producer OAO Rosneft increased 9.6 percent to $4.55. The ruble strengthened 2.3 percent against the dollar, pushing its gain this year to 7.4 percent. The currency dropped 46 percent last year in the worst performance among emerging- market currencies.

The dollar-denominated RTS Index of Russian stocks jumped 11 percent in the first quarter following a 45 percent plunge in 2014 that was the worst performance among 93 primary equity gauges tracked by Bloomberg. The measure sank last year as a plunge in the price of oil, the country’s biggest export, worsened the impact of international sanctions, sparking record capital outflows.

Brent crude, the oil grade traders use to price Russia’s main export blend, has averaged $57.74 a barrel in the past two months after recovering from a five-year low of $46.59 in mid- January. It dropped 3.8 percent to $54.95 on Thursday as Iran and world powers moved closer to an agreement that would lift sanctions imposed on the Persian Gulf nation, including oil exports.

“A drop in oil prices is probably the major risk to the rally in Russian equities,” Vladimir Tikhomirov, the chief economist at BCS Financial Group in Moscow, said by phone Thursday. “Oil is everything for the Russian economy.”