RTS (Moscow) Market Overviews

Opened on Tuesday due to holidays in Russia, RTS index managed to increase by 1,52% reaching the value of 2262,11 when it closed on Friday. This weak the growing trend was mainly supported by internal factors, as many companies revealed positive corporate news. News from commodities markets also were optimistic as prices on oil and some other commodities increased in price once again. Furthermore, RTS index was not influenced by negative dispositions at other stock markets, as it happened many times before this year. It also can be viewed as a positive factor. The turnover for four days was 169 938 986 €.  This is 22% more than in the same period during the previous week. Top movers of the week were ОАО ВолгаТелеком, ао (NNSI) gaining 12,17% and closing price 4,386€ and ОАО ММК, ао (MAGN) losing 5,88% and closing price 0.874€.  The volatility was rather high each day, it was common to find some stocks increasing by 1-2% in the morning, but closing negatively by the end of the day and vice versa.

 

All three top gainers of the week come from telecommunication sector, apart from NNSI, it was ОАО МТС, ао (MTSS) with +9,38% and ОАО Сибирьтелеком, ао (ENCO) with +8,70%. Such high increases can be explained by positive financial indicators of companies and positive future expectations. Concerning ОАО ВолгаТелеком, the first reason for growth was the announcement of the revenue figures which increased by 17,4 % in the last 9 months in comparison with the same period in 2006. Proceeds for 9 months of 2007 amounted to EUR 484 million, communications services revenues have grown to EUR 457 million (+18,2 %). The second reason was the news about adjudication of the «ОЛИМП КАЧЕСТВА» national award for outstanding achievements in the sphere of telecommunications. Actually, all the sector is underestimated and market analysts say that fair prices of the stocks of these companies should be higher than they are now, so the trend should continue and investing in telecommunications looks like a really perspective and profitable investment.

 

In oil and gas sector good results during this week were performed by Gazprom companies. The price of ОАО Газпром нефть, ао (SIBN) closed at 3,604 € with increase of +7,07%. Investors kept buying stocks due to expectations of positive January-September company’s report. On Thursday the net profit was announced to have grown up 15,3% compared with the similar period of the last year. But this announcement had some negative information as well: the net profit of ОАО Газпром нефть, ао in the 3rd quarter 2007 was 20% less the parameter of the previous quarter mainly as a result of increase in the cost price of oil. Due to this news the bulls’ interest weakened and the increase stopped on Thursday. This is why next week it is rather risky to invest in this company, as there are rather controversial news which influence the stock.

 

The price of ОАО Газпром, ао (GAZP) kept increasing two weeks in a row in parallel with RTS index. During this week the price of stock grew and reached its closing price at 8,9216 € with increase of +5,13%. Among many other reasons, the increase in price was based on consideration to list GAZP shares on the Shanghai Stock Exchange. Moreover, ОАО Газпром announced about preparations to acquire 300 stations in Poland in cooperation with British Petroleum to extend its refined petrol production. Positive information during last weeks will probably keep increasing the stock value even further.

 

One of this week’s top gainers was also ОАО Седьмой Континент, ао (SCON) gaining 6,32%  with the closing price of 18,87 EUR. Such a leap in price can be reasoned by the change in company’s shareholders structure. One more piece of news affecting the share price was the consolidation by Alexander Zanodvorov of 100% of shares of the company ЗАО "7К инвест-холдинг", which controls 74,81% of shares of ОАО Седьмой Континент,. The transaction will make easier to sell the share to the third party. Presumably, it will be American private investment fund Texas Pacific Group and Goldman Sachs Private Equity. It is thought that the powerful team of foreign managers and experienced financial investors will positively influence the activities of the company and provide its further development. As for the future, ОАО Седьмой Континент has one of the largest growth potentials amongst the other companies of the consumers’ sector.

 

This week the rate of growth of oil, metallurgical and other mining companies, which were the top movers of RTS index for some months, decreased, and it were consumers’ and telecommunication companies as well as companies, providing services, which moved the index in positive direction. It is believed that most of companies in these sectors have a potential to continue growing considerably, and investors should be aware to changes happening with them. Another point is that stocks’ rally of all companies is expected to happen in December, after the elections in Russian parliament happen and before decisions to pay dividends to shareholders will be made. In short run, however, decreases of most overbought companies are to occur.