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Reports Russia

Russian stock market daily morning report (July 10, 2014, Thursday)

July 10, 2014, Thursday, 10:37 GMT | 05:37 EST | 14:07 IST | 16:37 SGT
Contributed by Veles Capital

Protocol of the Fed session posted yesterday evening, indicates that regulator still is for stimulation policy. Lack of signals of tightening the monetary policy was the reason for the American market to climb. Positive effect from American news will be partially compensated by the data on export from China, which appeared to underperform targets. In the evening, the market will be driven by the data on the number of jobless claims in the USA.

Main events

VEB believes that all the offered scenarios of rescuing Mechel are loss-making for VEB.

Management of VEB made a decision not to participate in the offered schemes of rescuing Mechel and is ready to put up the given issue at the supervisory council of the state corporation, headed by the prime minister of Russia Dmitriy Medvedev.
RusHydro reported by IAS for 1Q 2014 above targets.

We assume the results posted by the company are positive. The following major factors were responsible for positive effect on the company’s financial results: growth of output of power energy by HEPS in 1Q 2014 by 2.9% and price growth at the wholesale market in the I prices zone. We expect the financial estimates of RusHydro for 1H 2014 to experience negative effect of the decrease of generation by HEPS in 2Q 2014 by 16% yoy to 21.254 bn KW per hour.

Magnit upped its sales for June 32.8% (above targets).

Magnit upped its sales for June by 32.8%, for 2Q 2014 – by 30.6% and for 1H 2014 – 27.9%. For 2Q 2014, the retailer has accelerated the growth rates of expanding the network having opened 362 stores vs 341 in 2Q 2013 (net, including closed stores). Acceleration occurred with the help of cosmetics stores: 78 locations were opened. We assume given results of Magnit are positive for 1H 2014 and on the threshold of the release of 1H 2014 results output (June 23-25) we expect the quotes of the company to climb (in terms of favorable or neutral background at the market).