RTS (Moscow) Market Overviews

22/10/2007 - 26/10/2007

This week RTS index increased by 2,43% and closed at its historical maximum reaching the value of 2194.12. The bullish dispositions at Russian market were mainly provided by steady growth at world's commodity markets and record prices on oil. Another factor which influenced on changes in value was in general positive financial and corporate news of most liquid companies. However, the overall turnover was rather low, only 203 787 897 €, that is 11,1% less than of the previous week. Concerning the top movers of the week it was ОАО Мечел, ао (MTLR) gaining +17,65% (closing price 17,36€) and ОАО ВолгаТелеком, ао losing -4,72% (closing price 3,79€). Basically, the RTS index was rather volatile - faced by negative background from American stock markets it lost 2% at the beginning of the week and then growing gradually on the other days increased the value by the same percentage on Friday.

The main interest in movements was caused by oil and gas and metallurgical companies. At first we will take a look at the metallurgical sector. After previous week's correction in metallurgical sphere there was a considerable growth in value by almost all companies this week. The top performers were ОАО Северсталь, ао (CHMF) +8,47%; ОАО ГМК Норильскийникель, ао (GMKN) +8,51%; and especially the top gainer in the whole market ОАО Мечел, ао (MTLR) +17,65%. These numbers can be explained by increase in world prices of metals, basing on speculation that global growth and economic expansion will boost demand for the metal in next few years. Precious metals such as gold, platinum and palladium also reached its record values of last few years. Another factor is that market is awaiting decision of these companies to pay the dividends, which will be paid only to current stock holders. However, in long term period starting from spring 2007 there has been a rising trend for these stocks, and now there is a believe that their prices are overstated. So if world prices for metal fall next week, the decrease in stock value might happen.

Other steady gainers of the week were oil and gas companies. The reason why their value was growing is rather obvious. This week price of oil jumped to its record value and now there are thoughts that it will soon reach 100$ per barrel. This situation was caused by the new USA sanctions on Iran, decline in the world's most developed economies' industry stockpiles of oil and petroleum by 33,3 million barrels during the third quarter of the year and threats of Turkish invasion into Northern Iraq. The most interesting situation was with ОАО ЛУКОЙЛ, ао (LKOH), +1,74 % (closing price 61,05€), the company that influenced RTS index the most this week. It dropped by -3,94% on Monday (more than all the other companies) on the news that its economic activity in Iran has to be decreased due to the USA sanctions in this country. However, as it was already said, increase in oil prices and estimation that Lukoil's net profit will be 4,7% more this year in comparison with last one helped company to recover and gain some value at the end of the week and probably it will continue to rise next week as well.

Two of the main losers were ОАО ЦентрТелеком (ESMO) and ОАО ВолгаТелеком (NNSI). ОАО ЦентрТелеком experienced decrease of stock by 4,39% and in the end of the week stock price reached 0,64 €. ОАО ВолгаТелеком went down by 4,72%, fixating at the value of 3,79 €. The decrease could be explained with appearance of the new competitor "ЭР-Телеком". Despite the fact that "ЭР-Телеком" is a new member of fixed phone service, its introduction to the market provoked sharp decrease in stock prices of these two companies. Such a significant drop was followed by slight increase after Standard & Poor's positive evaluation of companies by the end of the week, and such a tendency of improvement could continue in the future.

The RTS most probably will continue to grow at the beginning of the next week, provided by positive indicators from the USA stock exchanges, which happened on Friday, when indexes increased by 2% in value. But as to the whole week it will be highly dependant on the trends at commodity markets, especially oil. The point is that RTS together with some other indexes reached its historical peak this week, and it may be a signal for investors to fix the profit and sell the stocks next week, that is why macroeconomic indicators will be of high importance in which direction movement will go. From the other side RTS has been showing a stable steady growth for already two months and does not experience serious threats to decrease, so in long term period new maximums and RTS level of 2300 are awaited by the end of the year.