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Reports Russia

Russian stock market daily morning report (June 19, 2014, Thursday)

June 19, 2014, Thursday, 08:48 GMT | 04:48 EST | 13:18 IST | 15:48 SGT
Contributed by Veles Capital

Today the Russian market will be driven by the reaction of the global markets to the results of the Fed’ session. As expected, the QE program was cut by 10 bn RUR down to 35 bn USD, cut will start from early July. Fed announced that the economy continued recovering by mild rates – the GDP growth target for 2014 has been downgraded from 2.3% to 2.1%, at that the targets for 2015-2016 have been upped from 3% to 3.2% and 2.5-3% respectively. The statement of Fed that the investors should be prepared for the rates standing at the current levels for a relatively long-term period after the program is cut (at that the rate is supposed to form 1.25% in late 2015 and 2.5% in late 2016) caused a positive reaction at the markets. Additionally the oratory that according to Fed the stock prices were within the frames of historical norms served as a driver for the markets. The American market reacted with a significant growth to the words of Janet Yellen and that might serve as a reason of growth to the Russian market this morning. Nevertheless, we assume that the statements of Fed did not introduce any serious positive surprises and considering the market being overbought, correction might continue at the market.

Main events

Production of the power energy in RF for May 2014 reduced 0.6%

The worst reduction of half-year financial results will be indicated in the companies that own termal stations in the 2nd price zone (Inter RAO, OGK-2, E.ON Russia), as besides the output drop, the prices of power were below the 2013 level during the year, especially in May, when the average price dropped 22.2%.

Mechel might issue convertible bonds for 180 bn RUR in the favor of VEB

Mechel might issue convertible bonds for 180 bn RUR in the favor of VEB. Other sources state that Mechel might conduct an additional emission in the volume of 180 bn RUR, which leads to a significant blurring of shares of the current stockholders.