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Reports Russia

Russian stock market daily morning report (August 11, 2014, Monday)

August 11, 2014, Monday, 10:06 GMT | 05:06 EST | 13:36 IST | 16:06 SGT
Contributed by Veles Capital

Today the dynamics of the Russian market is mainly determined by the decision of MSCI – index provider, as we expected, made a decision to keep VTB and Sberbank in its indices – both banks do not intend to conduct an additional emission in the nearest future and prohibition of operations for the western investors involves only the new shares. We assume that the given decision positive for banks would lead to growth of the stocks’ quotes of VTB and Sberbank today, which would turn into the reason of general growth at the Russian market.

Main events

Magnit managed to recover an upside trend of its quotes having won back 3% after a drop overnight by 6% at the back of introduction of embargo for foodstuffs.

We assume that Magnit has all the grounds for showing strong results of operation, which in its turn is positive for its quotes. Thus, our estimation of the company provides for a fair value of the common shares of Magnit at the level of 307 USD per share, which provides for a potential of growth vs the current quotes at 18% and provides for the recommendation “BUY”.

EBA: selling new light commercial vehicles (LCV) in Russian Federation dropped 22.9% yoy.

According to our estimation, deceleration of the growth rates of the real available income was the reason for that at the back of the progressing reduction of export income from selling non energy goods from 2012. Drop of income developed in to the fact that high inflation preserves in Russia (7-8% per year) while the nominal income did not rise. Respectively, the buying capacity has been reducing. The strongest effect indicated in the least wealthy groups of citizens, which affected the demand of low cost vehicles. The domestic made vehicles and some types of not expensive foreign made vehicle form the low cost segment.