Azernews.Az

By Bloomberg

U.S.-traded Russian stocks rose for the first time in three days as OAO Surgutneftegastegas led energy producers higher and data showing inflation slowed rekindled speculation that a forecast recession this year won’t be as deep as projected.

The Bloomberg Russia-US Equity Index jumped 1.6 percent to a two-week high in New York. Surgut rallied 5.5 percent, the most since early April, to $5.89. The Market Vectors Russia ETF, the biggest exchange-traded fund tracking the country’s stocks, resumed its advance, rising 1.9 percent to $18.14, its fifth gain in six days.

Data released Wednesday showed consumer-price growth slowed to 0.1 percent in the seven days through July 13, down from 0.7 percent in the prior week. The government earlier this week said the national budget deficit narrowed to 889 billion rubles ($15.6 billion) in the first six months of the year, surprising most economists surveyed by Bloomberg, whose median estimate was for it to widen to 1.19 trillion rubles. Oil is Russia’s biggest export.

“Even as the country is isolated from the rest of the world and the economy is shrinking, Russia is slowly learning to live in this new reality,” Aleksei Belkin, the chief investment officer at Kapital Asset Management LLC, said by phone Thursday. “As nobody is expecting Russia’s economy to suddenly start growing, the positive data on the budget deficit being lower than expected and current account surplus bigger than last year add some degree of optimism.”

Shares of Moscow-based United Co. Rusal fell 3.3 percent as of 11:01 a.m. in Hong Kong on Friday. Brent crude oil futures for September delivery climbed 0.2 percent to $57.04.

Economic Contraction

Economists surveyed by Bloomberg estimate that Russia’s gross domestic product will contract 3.5 percent this year as oil sells at around three-fifths it five-year average price and the U.S. and its allies isolate the country with sanctions linked to the Ukraine conflict. Gross domestic product shrank 4.9 percent in May, government data showed last month. The central bank meets at the end of this month to decide whether to reduce the country’s key interest rate, which is currently at 11.5 percent.

Policy makers are unlikely to maintain the pace of easing at 100 basis points on July 31, Tatiana Orlova, the chief Russia economist for Royal Bank of Scotland Group Plc in London, said in a research Thursday. Bank of America Corp. forecasts a 250 basis points cut in key rate over the year, analysts including Vladimir Osakovskiy said in a note on Thursday. The Bank of Russia increased the rate to 17 percent in December in an emergency move to stabilize the ruble, which plunged 46 percent against the dollar in 2014.

The Bloomberg Russia-US Equity Index rose to 55.07, extending its gain this year to 11 percent. Futures on the dollar-denominated RTS Index expiring in September dropped 0.7 percent to 91,100 in U.S. hours.