Citi looks at Africa, cuts Russian stocks

Bloomberg

The brokerage also raised its rating on South African shares to "overweight" from "underweight," analysts Andrew Howell and Maria Gratsova wrote in a report.

The MSCI Russia Index has more than doubled from its Jan. 23 low, taking its gains this year to 80 percent. The MSCI Emerging Markets Index has climbed 58 percent during the period. "Having risen more off its lows than any other emerging market, Russia no longer looks nearly as undervalued as it did a few months ago," the analysts wrote. "Meanwhile, significant macro challenges remain."

Russia’s economy is expected to remain weaker than other large developing nations, including China and India, the report said. President Dmitry Medvedev Tuesday said Russia’s economy will shrink at least 6 percent this year after gross domestic product contracted an annual 9.5 percent in the first quarter, the biggest slump in 15 years.

Russia’s RTS Index has gained 87 percent this year, the second-best performer among 92 global indexes tracked by Bloomberg. Only Peru’s Lima General Index has climbed more, having doubled in 2009.