RTS index dropped by 0,71% this week to 2269.53, mainly due to the -2,06% collapse, which happened on Friday. The week was very contradictory concerning the factors that influenced behavior of stocks. Up to Thursday the positive external background and especially the news about nomination of Dmitry Medvedev on the post of future president increased investors’ confidence in Russian market and inflow of funds in Russian companies. On Wednesday RTS closed with 3,2% increase to the previous week. However, in the next days the situation at the world stock exchanges worsened. FRS US lowered the interest rate only by quarter point. Moreover, market fears that the
U.S. may face a recession. Negative news was also strengthened by uncertainty about future of the banking sphere. Therefore, on Friday fears about the future forced investors not to risk and to fix the profits, gained at the beginning of the week. The activity of traders this week increased significantly, as the turnover was 274 439 967 EUR, jumping by 25,7% in comparison with previous weeks. Top movers of the week were JSC Gazprom (SIBN) gaining 11,61% and closing price 4.33 EUR and JSC Avtovaz (AVAZ) losing -12,5% and closing price 1.21 EUR. The volatility of most stocks was really high, especially on Monday when companies were gaining 2-4% and on Friday when losing 3-5%.
One of the companies of main interest during the last week was RAO “UES of
Russia” with the increase of 2.92% and the closing price of EUR 0.8965. Primary attention was concentrated on two pieces of the news: preliminary results of TGC-9 IPO and Share Sale, and approval of the report on the results of shareholder requests for share buyback. On 10-th December reviewed the bids for the TGC-9 shares owned by RAO "UES of Russia". Based on the decision of the RAO UES tender commission and review of the price bids, the Board of Directors of TGC-9 set the offering price at EUR 0.0002 for each additional ordinary share. Subscription for these shares was available from until 17-th December. The overall amount of funds which will be raised through the share offering and sale of the TGC-9 stake will make EUR 906.8 mill. On 14-th December Board of Directors of RAO "UES of Russia" approved the report on the results of shareholder requests for share buyback. Shareholders were interested in redemption of shares for EUR 2.88 bill, whereas the company can buy the shares for the amount not more than 10% of the company’s net assets on the date of the shareholders’ meeting, i.e. EUR 2.83 bill. As the amount of shares for redemption exceeds the 10% limit, the board postulated an index of 0,988 to determine the number of shares that RAO UES buys back from shareholders. The situation observed on the market is of big interest and powerful forces have entered the market. It is estimated that in short run the share price will increase, and in long run it also has very good prospects.
JSC Uralkali shares in RTS have risen in price by 2% after the publication of news about increase of JSC "Belarusian Potash Company" (BPC) the prices on potassium chloride for the countries of
Asia by 25 % from EUR 277.50 up to EUR 346.87 for ton. Capitalization has made EUR 8.6 billion. In October at IPO the company has been estimated at EUR 5.1 billion. The trader makes long-term contracts with the Chinese and Indian buyers. In these contracts the stipulated price in the nearest future will be reconsidered. If now BPC sells goods in these countries for EUR 166.50 and EUR 187.31 for ton accordingly after significant rise in price of potash for
Brazil (EUR 242.81) and Asia (except
China and
India), the probability of essential updating of the prices for
China and
India in the direction of increase is great. It is expected, that in 2008 these countries will buy "Uralkali" production for EUR 242.81-277.50 per ton. The price for the previous week per one share increased by 8.18%, i.e. the price for the last trade was EUR 4.13. Minimum price for the previous week was EUR 3.82, maximum – EUR 4.16. Taking into account the last growth of cost of fertilizers we have reconsidered the assumptions concerning a price level on fertilizers in the world market on intermediate term prospect in the direction of increase. It is recommended to „sell”.
One of this week’s loser is JSC MMC
NORILSK NICKEL, JSC GMKN: -7.76%, closing price EUR 177.25. Such a fall is provoked by the uncertainty concerning the future of the non-specialized energy assets, whose estimated value is EUR 4.12 billions. The top-management of the company considers 2 further opportunities, which depend on the common decision of the shareholders: separation of the assets and forming an independent company in the positive outcome and selling of them in the negative one. Actually, the best part of the top-managers anticipates the positive decision, which would lead to the apportionment of the assets and their reorganization into the company JSC “EnergoPolyus”. But, there are also some shareholders who claim to vote against it, thus stirring up the trouble and spreading the vagueness among people. Anyway, if the assets are separated, it, most probably, will cause the rise of the shares value as the innovation will affect positively the company.
Even though on Friday stocks collapsed, next week the growth may still continue. Many believe that it was a local correction and RTS has still high potential to increase in value. Corporate news of most companies was positive and they are still quite underestimated. Political stabilization can also influence on foreign investors to put up money in the country. However, it is not really clear whether the rally will continue. Apart from political news, there are no strong positive factors which can provide growth. Another thing is that external factors are rather negative, therefore no support from the world markets can be provided to
Russia. At the beginning of the next week it will become clearer in which direction the market is expected to go.
By Jelena Dmitrijeva
Aleksandra Jakushenko
Pavels Berezovskis
Vitalijs Silvestrovs 
