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Reports Russia

Russian stock market daily evening report (July 30, 2014, Wednesday)

July 30, 2014, Wednesday, 20:18 GMT | 15:18 EST | 23:48 IST | 02:18 SGT
Contributed by Veles Capital


Stocks

Market today. Tuesday evening the EU and US have announced new sanctions against Russia. Sanctions of the EU will officially be signed by the EU Council today, and will be posted and valid from tomorrow. Despite that, the Russian exchange market showed mild adding on Wednesday. Given reaction might be related to the fact that more serious sanctions have been expected. Moreover, CBR announced its intention to support the Russian banks that suffered the sanctions, which added optimism to the market.

As for macroeconomic releases, we would like to point out the revision of GDP for 2Q from 3% to 4%. Growth has been provided at the expense of the consumer demand adding (+2.5%) and private investments (+17%), and also due to increased import (+11.7%) and export (+9.5%). Revised data indicates resumed sustainable growth of the economy, which is positive for the demand for risky assets in the US, however, such optimistic numbers will unlikely affect the Russian market.

Market tomorrow. In the short-term prospect, we are unlikely to observe worsening of the financial state of banks or companies included in the sanctions’ list, however given names might face some difficulties with refinancing their debts in the long-term period. Therefore, the Russian exchange market will unlikely show confident growth within the nearest days as understanding of deferred problems will gradually be getting in focus.


Bonds

Market today. Despite the EU having introduced economic sanctions, the Russian debt market bounced up today. Mainly that was due to the technical correction after a two days of selloff, but also due to the fact that sanction turned out be not that bad. BFL added 20-40 bps, yield reduced 1-5 bps. In the corporate segment went on the loans of VEB-9, Gazpromneft-12, FNC-19. Eurobonds added about 15-30 bps. Russia-43 added 115 bps and formed 103.05% of the nominal, Russia-23 – 35 bpd to 99.45% of the nominal.

Market tomorrow. We assume Thursday the market consolidates at the current level due to preserving pressure of the Ukrainian factor and lack of any reasons to grow.