RTS (Moscow) Market Overviews

RTS index continued its falling trend this week dropping by 1,77%  to the value of 2151,89. Therefore from the beginning of correction it plunged by more than 6% in about two weeks’ time.

The reasons for changes of stock values seem to be rather controversial. There was a lot of news which had a potential to provide growth: positive corporate accounts of some companies, no political shocks on the threshold of Russian parliament elections and increased world prices of main commodities. Especially it should be mentioned that oil price reached its historical maximum this week. Out of negative news it is worth to emphasize on continuing economic crisis in the USA, which negatively influenced the most of world stock exchanges, including Russian. Other factors which stood for decrease were indicators of technical analysis. As show the figures, investors mainly responded to negative news, without taking into account the positive ones. The turnover was 236 635 188 € which is just 3,1% higher than the week before. The top movers of the week were JSC Mechel (MTLR) gaining 5,68%  and closing price 15,65€ and JSC Uralkali losing 9,68% and closing price 2,83€. The volatility was rather moderate this week, however some stocks like Norilsk Nickel  (GMKN) were traded in the range of 3-5% each day.

In oil and gas sector no companies increased its value this week despite rising oil price. The only company which has not changed its price which is 4,04 € was JSC Novatek (NVTK). The reason for this is that it has continued to show stable growth of the proceeds and net profit. Hence, the proceeds of the company for nine months 2007 have grown by 1.3 %, up to 1260 million EUR from about 1039 million EUR. The net profit of JSC Novatek in January-September 2007 has grown by 21.7 %, up to 379 million EUR from approximately 311 million EURin the similar period of 2006. According to company’s data growth is explained by a favorable conjuncture of the prices. It is important to underline, that the company showed a significant gain of proceeds and profit, despite of decrease in extraction of gas on 2.8 %; that was the reason of restrictions of swinging of gas in Gasprom’s underground storehouses. At the Moscow stock exchange the shares of the company increased during this week by 4,56%. And positive movements in company’s stock value in RTS index are expected next week. Analytics say that company’s value by the end of 2007 may reach 4.8€ per share.

Rather interesting movements were observed in banking sector. Companies started the week really negatively, falling by 3-4% each day. The decrease happened mainly due to ceaseless negative information once again provided by leading world banks, which suffered billions of dollars credit losses this year. Foreigners were afraid that the same situation could happen in Russia. However, by the end of the week some of leading Russian banks released very strong corporate news, therefore refuting believes of their incompetence. The trend for these companies changed and in the last days they performed even as the top gainers. The striking example of this was Sberbank (SBER) with -3,66% and closing price 2.7425€. Negative American and European indicators were pushing the price down up till Friday, when bank’s financial information was published. According to this information net profit of Sberbank on November, 1 was 3 152 800 000 EUR, which is 54% more than a year before. This information positively influenced the price and it went up during Friday’s trading session. According to analysts’ prognosis the share price in short-run can go up and reach the level of 2.93 EUR. In a more distant perspective this price may become a trend’s resistance level.

This week’s top gainer was JSC "Mechel" (MTLR) with the increase of 5.68 % and the closing price 15.67€. Such a position was caused by several announcements. The first one was about an intention to acquire shares of the heat power station “Русе” in Bulgaria. In order to fulfill this goal JSC “Mechel" presented a petition to Bulgarian antimonopoly committee which will come up with a decision in the nearest future. The second announcement was about the redemption of all the company’s outstanding triennial certificated interest-bearing inconvertible bonds payable to bearer of series 01 with obligatory centralized keeping. The series 01 bonds were issued in November, 2004. The number of the bonds placed was 2 million. The value of one bond was 27.70 EUR and the total amount of the bonds redeemed was 55,400,000 EUR.

Next week RTS index may be rather volatile in both directions. The main reason is that next Sunday the new Russian parliament will be elected and political changes always bring uncertainty about the future of some companies. However, everything speaks well for the fact that the majority in the parliament will be formed by Russian president’s Vladimir Putin’s party “United Russia”. This means that political policy will remain the same. It is the positive sign for foreigners to invest their capital in Russian stocks. Another positive factor is that technical analysis says that correction and falling trend should be over.

By Aleksandra Jakušenko

Vitālijs Siļvestrovs

Pavels Berezovskis