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Reports Russia

Russian stock market daily morning report (May 06, 2014, Tuesday)

May 6, 2014, Tuesday, 08:14 GMT | 03:14 EST | 11:44 IST | 14:14 SGT
Contributed by Veles Capital

Business activity index non-manufacturing, posted overnight in the US, appeared to be significantly above targets and allowed the American market to close in the green zone. This morning the Russian market will probably climb slightly up, winning back the positive data on the American economy, business activity index will be posted in UE at daytime and the retail selling and trade balance of the US might pour optimism to the investors’ sentiment in the evening.

Main events

Inter RAO and OGK-2 signed a framework contract on the opportunity of buying power energy directly for export selling.

We assume that such a deal will make sense only in case a favorable price of power energy is set at the Scandinavian Nord Pool, which in its turn depends on the water ratio of the rivers. In case the price conjuncture for the Russian export is favorable at the market, not only Inter RAO (Russian export monopoly), but OGK-2 will clear benefit from that as the last mentioned generation would manage to rise the load of its capacity and smooth the general drop of the power consumption in Russia.

TGK-1 stations cut their output of power energy 14.1% yoy for 1Q 2014, heat energy – 10.7% yoy.

We suppose that despite the significant reduction of the power and heat energy output by the stations of the company at the back of the total decline of consumption, and unfavorable conditions for the hydro-station companies, the final consolidated financial quarter results of TGK-1 do not differ much from the results for 1Q 2013 due to optimization of the generation at newer and more effective stations and also due price growth of power energy and capacity at the wholesale market.