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Reports Russia

Russian stock market daily evening report (February 03, 2014, Monday)

February 3, 2014, Monday, 15:41 GMT | 10:41 EST | 21:11 IST | 23:41 SGT
Contributed by Veles Capital


Stocks
 
Market today. The Russian exchange market opened in the green zone today within the frames of correction to the strong drop overnight. By 4:30 pm MSK the MICEX was already drifting within the range of the previous day 1,450-1,463.54 points at the back of the mixed dynamics of ruble prices of the majority of the most liquid stocks (1.1%). Note that the drop of business activity index in processing industries of Russia for January down to 48 points (which is the lowest estimate for recent 55 months) was the negative news for the Russian market, aside the weak stats from China. Reduction in the industrial sectors indicated in the field of buying activity, volumes of the new orders, export and operation employment. ATP exchange trade closed the session negatively after data posted in deceleration of production activity growth in China, which enforced the alarms about the general slow down of the global economy. The official PMI in processing industry of China for January reduced down to 50.5 points from 51 point, however, it stayed above the target level of 50 points. At the European exchange grounds we indicated mixed trends early today after a significant drop for the previous trade session, but the situation stabilized afterwards. American exchange grounds are drifting sideways at the back of the positive European stats. Index of the business activity in the industry of Germany and EZ for January grew up to 56.5 points from 54 points, while no changes were expected to be found vs the December numbers. Oil prices are also looking down this Monday. Price of the futures for Brent oil for April formed 105.25 USD per barrel, price of the futures for WTI – 96.11 USD per barrel.
 
By the end of the day the following shares were outperforming the market: AFK Systema (+3.30%), Magnit (+2.80%), VTB (+0.8%), NOVATEK (+0.6%), Polyus Gold (+0.5%), Sberbank Russia (+0.7%) and Surgutneftegas (+0.6%). Generally that occurred due to ruble weakening, which takes place since the second half of January.
 
Market tomorrow.  As for the important events, we expect volatility to grow this evening (7:00 pm MSK) at the back of American data on the ISM of US manufacturing, and the construction spending numbers. We assume the Russian market open tomorrow will depend on the results of trade in the US.
 
 
Bonds
 
Market today. Despite posted weak PMI data on Russia and weakness of ruble, the quotes of the Russian loans bounced upwards. BLF added Monday about 30-50 bps, yields lost 2-5 bps. In the corporate segment buying went on the loans Nomos MB-6, Rosbank MB-7 and SPbTelecom-7. For the most part of the day the Eurobonds wondered around and by the end of the daytime session they started adding in price. At that, the upside trend preserved in the Treasuries’ yields at the back of expectations that this week’s stats indicate necessity of further cut of QE volume.
 
Market tomorrow. Growth of the UST curve might pressure the quotes of the Russian currency loans, therefore, we assume that the reduction might progress. Ruble issues might also experience pressure in case ruble resumes its drop.

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