Buy Russian Stocks on Ceasefire Possibility, Credit Suisse Says

By William Mauldin

Aug. 11 (Bloomberg) -- Investors should buy shares of OAO Gapzrom and OAO Rosneft because Russia's stock market may rise if there is a ``lasting cease-fire'' in the conflict with Georgia, Credit Suisse Group said.

``The Russian market has been punished excessively over the last couple of weeks,'' Credit Suisse analyst Vladimir Savov wrote in a note to investors today.

The 50-stock RTS Index has fallen to 2006 levels even though Russia's gross domestic product will rise to $1.64 trillion this year, compared with only $986 billion in 2006, the Swiss bank said. Oil averaged $66 a barrel in 2006, compared with $115 so far this year.

The RTS fell 6.5 percent on Aug. 8 as the conflict over the breakaway region South Ossetia escalated into what Prime Minister Vladimir Putin called ``war.''

A cease-fire and a ``long-term resolution'' to Russia's clash with Georgia in South Ossetia would be a ``catalyst'' for a recovery in Russia's stock market, Credit Suisse said. The RTS has fallen 25 percent since the end of December, heading for its worst year since Russia defaulted on its debt 10 years ago. The Micex Index has dropped 28 percent.

Besides Gazprom, the world's biggest natural-gas producer, and Rosneft, Russia's biggest oil producer, Credit Suisse recommended shares of OAO Lukoil, the second-biggest oil producer; OAO RusHydro, the world's second-biggest hydropower producer; and OAO Sberbank, the country's biggest bank.

To contact the reporter on this story: William Mauldin in Moscow at wmauldin1@bloomberg.net.