Russian equities, rouble rise on China, oil, taxes

MOSCOW: Russian equities and the rouble rose at Tuesday's opening, tracking broad gains in riskier assets that were fuelled by higher than expected growth numbers from the largest emerging market economy of China.

At 0740 GMT, Russia's top two exchanges were up, with the dollar-denominated bourse RTS gaining 2.1 percent and the rouble-traded MICEX adding 1.9 percent, both over performing the MSCI emerging market index, which was up 1.7 percent.

The rise followed similar moves in Asian shares on Tuesday as markets viewed the 8.9 percent economic expansion of China in the fourth quarter of last year as a sign the growth momentum in the world's second-biggest economy was powering ahead with strong dynamics.

While the expansion was the weakest pace in 2-1/2 years, it was stronger than analysts had expected.

"The importance of a soft landing of the Chinese economy for asset prices in the world is hard to overestimate," said Slava Smolyaninov at Uralsib in Moscow.

"While the slowdown in the Chinese economy remains a point of concern, the announced macro data is encouraging for commodities and subsequently Russian equities."

The MICEX oil and gas index was up 1.9 percent, capitalising also on climbing crude prices, with Brent crude rising 59 cents to $111.93 a barrel.

The shares of the country's largest oil producer Rosneft were up 1.5 percent, while Tatneft, the country's sixth-largest oil producer, rose 1.8 percent.

High crude prices, which remain solidly above the annual average of $100 per barrel penned into this year's budget, have also given some stimulus to the rouble.

The currency was 0.2 percent weaker against the broadly stronger euro, but was up nearly half a percent against the dollar and 0.1 percent against the dual currency basket the central bank uses to gauge the rouble's nominal exchange rate.

"The rouble should keep gaining, reflecting the positive external background, plus, exporters may also increase their sales of the hard currency," said a dealer with a large Russian bank.

There's been a spike in demand for the rouble due to monthly tax payments, which forces exporters to convert their chiefly dollar revenues into the Russian currency.

But this month's tax payments have been easy on liquidity levels in the banking sector so far, with overnight interbank money rates oscillating around 4.0-4.5 percent, their lowest since the summer.

The spread on Russia's 30-year benchmark Eurobond tightend by around 10 basis points to 116.9 bps, while the yield oscillated little changed at 4.50 percent.