The Magnit retail chain has become one of the ‘heavyweight’ stocks in the MSCI Russia 10/40 index – a yardstick for many foreign investors. The company now has weighting in the index on a par with Gazprom and Sberbank.
After a revision of the MSCI Russia 10/40 index the weighting of
Russia’s
Magnit retail chain has more than doubled – to 9%. This makes its
share of the
index almost the same as the country’s gas major Gazprom and is a
little
greater than Sberbank, Vedomosti quoted Ilya Pitersky, a strategy
analyst at
VTB Capital as saying.
Such a reshuffle within the MSCI Russia 10/40 index could make
Magnit
shares the best performing in Russia this year, with a correction
likely to come
in 2014, says Sergey Suvorov from the Russian Standard management
company.
Magnit shares have added 121% in the last 12 months and
skyrocketed more than
20 times since the start of the crisis in 2008. This growth was
one of the main
reasons for Magnit receiving more weight in the index.
Magnit's better position in the MSCI Russia 10/40 index is set to
significantly increase the company’s capitalization. On Tuesday
trade volumes
of Magnit shares in the RTS-MICEX floor were up almost 3.5% to
reach $45.1
million, compared to the ordinary daily results of the past
month.
Being a part of Russia’s emerging retail market, Magnit has great
growth
potential. The retailer doubled its profit in 2012, while Gazprom
saw its
bottom line fall by 9.5%, says Vyatcheslav Smolyaninov, a chief
strategist at
Uralsib Capital.
The MSCI Russia 10/40 index is calculated by Morgan Stanley and
embraces 27
Russian companies and covers about 85% of the free float –
adjusted market
capitalization. Prior to the revision such Russia’s commodity
giants as Lukoil
and Gazprom, as well as the country’s biggest lender Sberbank
were the most
weighted stocks in the index.
The whole MSCI ‘family’ of indices serves as a guidepost of the
Russian
share market for such global funds as JPMorgan Russia, BNP
Paribas and L1
Equity Russia.
MSCI membership makes a company’s shares easier to trade, thus
increasing
its attractiveness to investors.