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Reports Russia

Russian stock market daily morning report (June 25, 2014, Wednesday)

June 25, 2014, Wednesday, 08:05 GMT | 04:05 EST | 12:35 IST | 15:05 SGT
Contributed by Veles Capital

Data on the consumers' confidence and new construction sale posted in the evening (both outperformed targets) indicated further improvement of the situation in the American economy, but the market reacted likely negative – strong data is in the favor of the soon cut of QE and switching to the process of Fed’ rates upping – yesterday’s statement by the head of FRB of Philadelphia Charles Plosser on the rates possibly being upped in 3Q 2014 proves given idea. Foreign background today is likely negative for the Russian market and Ukraine will unlikely provide reasons to grow as strong as yesterday – most likely the Russian market corrects today.

Main events

Federal Grid Co. might receive funding in China.

The head of FGC announced that the company would be discussing the opportunities of funding the Russian projects with China. The prior news on possibility of attracting assets in China came out early this week, when the Russian Grids announced possibility of getting a credit in China. After the president Putin visited China in May, the cooperation between Russian and Chinese investors got even closer. Extra involvement in Chinese money comes from a rather low rate for attracting assets. The current market rate for such projects forms about 4-4.12% and considering the fact that SPV is to be established in parity, than the rate might turn out to be even lower, as the Chinese partner might attract assets at the domestic market of China under lower interest rate.

Agreement with Austria on the South Stream has been signed.

The chair of Gazprom Alexei Miller and CEO of Austrian OMV oil-and-gas corporation Gerhard Roiss signed an agreement of stockholders on the Austrian part of the South Stream that guarantees launch of construction and funding, and determines the terms of its operation. Austrian part is the final piece of the gas pipeline. Austrian authorities indicated that there was no problem with the energy legislation of Europe for the new project. According to Roiss, the South Stream was the investment in energy security of gas deliveries to Europe and that the South Flow would be inline with the EU legislation.