RTS (Moscow) Market Overviews

In terms of correction, RTS index dropped by 3.22% this week, rolling back to 2189,37, the value it had at the end of October. The bearish dispositions seem rather logical after the growth that was experienced by the index for about 3 months in a raw. Russian stock market is a bit overheated, and many investors, provided by negative external background from the world markets, tried not to risk and fix the profit by selling the stocks which increased the most in past months – oil and gas and metallurgical companies. In support to this assumption it can be said that there were no really negative internal news, which had a potential to contribute to the decrease of all “blue chips” and other leading stocks. This week the turnover was 229 346 783 € and only 9 companies increased their stock value. The top gainer of the week was ОАО РБК Информационные Системы, ао (RBCI) with +4,4% and closing price 6,5€, and top loser ОАО НЛМК, ао (NLMK) with -12,09% and closing price 2,59€. Volatility was rather high at the beginning of the week with stocks rushing in both directions, but at the end of the week most of the stocks showed unidirectional movement downwards.

The top gainer of the week was ОАО "РБК Информационные Cистемы".  The growth was mainly affected due to two news. The first of them provided the information about company’s growth in revenue during the last 9 months, which increased by 77% and gained value of 85.7 million €. The second publication notified about rapid change in audience of “РБК-ТВ”, the subsidiary company of "РБК Информационные Cистемы". During the year the audience increased by 39%, reaching the amount of 12.15 million. This promising data is evidence of positive development of the company and can be seen as a perspective for future investments, so increase in its stock value in long run will be logical.

One of the top gainers this week was also ОАО Вимм-Билль-Данн Продукты Питания, ао, with the increase in value by 4,29%  and closing price 58,14€. The main reason for growth was provided by quite impressive financial figures. The nine months net profit in 2007 doubled to 32 928 000 € from 16 380 000 € in 9 months of 2006. Sales in the same period increased more than five times  to 879 200 000 €  from 156 800 000€. Another reason is that this week  many participants started to sell the shares of companies which considerably increased in price in the past few months,  and invested the earned profits in rather understated companies. One of such companies is actually ОАО Вимм-Билль-Данн Продукты Питания - it had enough positive information, but was growing rather slowly in past months. So in short run the growth should continue.

Most of the leading metallurgical and oil sector companies decreased by 5-8% this week. One of the  main factors which influenced such a fall was situation at world commodity markets. Prices for oil and many metals, including gold lost their rising trend and started to drop. As to the main losers among the metallurgical sector’s companies, one of them was ОАО ГМК Норильский никель, ао (GMKN) with the closing price of 194,60 €  falling by 8,08% this week. Apart from the overall situation in the market, the stock price was brought down by the news about the company’s selling of 7 498 950 of ordinary registered shares that were held in company’s treasury. The selling price of one share was set at 194.94 EUR, which was lower than the market price. Before the information was announced, the price of one share was 208,96 € and the discount was expected to be not more than 2-3% of the market price, but in turned out to be about 8%. Such a big discount can be explained by speculative influence of investors. Using the money from these trades the company will be able to settle 30% of the current debts reaching 4,79 billions EUR. Provided with negative dispositions at the market in short run stock value is expected to decrease, however in long run there are factors which say that company may continue rising.

The upcoming week there are two opportunities for Russian stock market. Stocks may go upwards to the new heights once again or otherwise the correction will continue. Basically, movements in both directions will be dependant much on the news from other world stock exchanges and commodity markets. But it is what may happen in the short run. As to the long run, everyone agrees that almost all Russian shares have a potential to increase by 10-20% by the end of the year, and especially in telecommunication, gas and oil and energy sectors. So investors should be aware to the signals that the correction is over, because opening a long position at that time might become very profitable.  

By Vitalijs Silvestrovs

Viktorija Babineca

Paula Kokare

Pavels Berezovskis