Tallinn 10:00-16:00
Riga 10:00-16:00
Vilnius 10:00-16:00
Moscow 09:30-17:45
Stockholm 10:00-18:20
Helsinki 10:00-18:20
2010-01-21 13:16:01
EUR/USD 0.7076
EUR/LVL 1.4114
EUR/LTL 0.2896
EUR/EEK 0.0639
EUR/SEK 0.0989
EUR/RUB 0.0238
Indices: / OMXR -2.95% / OMXV -0.56% / OMXT 5.19% / OMXS30 0.30% / OMXH25 0.69% / RTS -1.81%                     Stocks: URSIS -100.00% / GZE1R -5.99% / GRD1R -5.78% / CHMFS -4.93% / SAB1L -3.57% / TAL1T 10.64% / NCN1T 9.59% / ARC1T 9.09% / OEG1T 5.22% / EEG1T 5.22%                     Porfolios: OP Nordic 5.70% / Kennet2 5.70% / Atsarginis 5.59% / esimene2010 5.54% / Crazy Fever 5.47%
 

RTS (Moscow) - Russian Stock Market Overview

Year: 2010 Week: 3
 
The 3rd week was very positive for RTSI index, which rose by 7.93% and reached 1559 points closing value. This was mainly caused by positive mood of investors after Christams holidays in Russia, which resulted in a leap (7.86%) of index by the end of trading session on Monday, 11.01.2010. In the middle of the week, however, RTSI index showed a dip with the lowest value of the week (1512 points) with a full recovery in the end. On Friday total market capitalization amounted to EUR 110,283,716,123 (up 0.3% from Monday). Naturally, most companies’ shares experienced either a steady growth or no change, while only few fell during this week. Top performers were JSC Severstalj (CHMFS) with a rise of almost 36% and Uralsvyazinform (URSIS), which gained 9.09% this week. The loser of the week became Gazprom (GAZPS), though the decrease was not very dramatic, only 2.6%.
 
 

Figure 1 Source: http://rtsi.tikr.ru/rts

The highest increase this week in RTS trading markets is JSC Severstalj (CHMF), which increased by 35.92%. It opened at 6.55 EUR and closed at 8.25 EUR. The main reasons which contributed to this high leap is the permission to build a new factory in Staratovsky district, as well as Severstalj’s announcement of building a new factory in June, 2010 in Balakov. They have already invested 141 million EUR in this project and the total investments will be around 353 million EUR. The factory will have 1 million ton metal production capacity. Another reason is many enterprise discussions about a new gas pipe production for Gazprom from 2010 till 2012. Severstalj will have the opportunity to produce those gas pipes. In December 30, 2009 Severstalj US Holdings LLC announced their equity increase from 49,23% to 51,25%; and their annual report showed that they had positive fiscal year in which they had profit increase comparing to last year by 9.9%.
 
 

Figure 2 Source: http://chmfs.tikr.ru/rtss

 
Another winner of the week is Uralsvyazinform (URSIS), the largest operator of telecommunication services in the Ural region. During the week value of its shares increased by 9.09% and reached 0.02 EUR per share. The weekly price changes were mostly caused by “outside factors”. On Tuesday the cost of energy and metals went down sharply, which affected not only commodity companies, but also several firms from other sectors. URSIS share price fell by 2.26%. Despite a bad start, the next day Uralsvyazinform received the highest possible (8) rating of corporate governance (the rating is based on evaluation of shareholder rights, composition and efficiency of management bodies and other factors). This, as well as general positive external background, raised URSIS value by 6.2%. Furthermore, on Thursday, after the end of the trading session, Intel Corporation released its quarter report. The company’s profits justified the most joyful expectations, which caused an increase in the shares of representatives of the IT sector. Uralsvyazinform shares, in particular, started new trading session with a price of 0.0198 EUR per share, which means, increased in value by 4.29%.
 

Figure 3 Source: http://ursis.tikr.ru/rtss

 
Gazprom (GAZPS) was the worst performing stock among those in RTS Standard market listed securities which are included in Invest Game 2010. Gazprom is one of the largest energy companies in the world; it produces 17% of the world natural gas. Gazprom opened the week at 134.43 EUR and closed the week at 130.93 EUR thus losing 2.6%. On Monday after Christmas holidays fueled by optimism of market participants GAZPS hit its week high of 137.84 EUR. New heights in crude oil prices (58.16 EUR/barrel) and hope that natural gas will follow them; very good expectations for emerging markets in 2010 encouraged investors to buy Gazprom stock. Later this week Gazprom stock fell together with five-day-long decline in crude oil prices. The drop on Tuesday was reinforced by PGNiG`s – the largest energy company in Poland - threat to sue Gazprom for up to 285 million EUR in lost earnings. Weakening world stock markets (S&P 500 -0.78%, FTSE 100 – 1.43%, CAC 40 -2.99% in week 2); rising fear of a pullback after spectacular gains (RTSI is 125% up since last year) resulted in even lower Gazprom stock’s price. The last year’s average daily volume for Gazprom was 13.8 million shares, in week 2 volume increased from 10.7 million shares in Monday to 17.6 million shares on Friday. Increasing volume at decreasing prices confirms validity of the lower price for Gazprom stock.
 
 

Figure 4 Source: http://gaza.tikr.ru/rts

Although this week market grew at a fast pace, authors believe it will slow down or even become negative next week. This prediction is mainly based on the assumption that currently most equities are overpriced after Christmas holidays and many market participants, especially those who are short-term speculators, will try to sell their stocks to retain profits made due to this week’s rise. Thus the overall market correction might happen, turning the index to a less steep or even negative direction. Another fact which might be a signal of unfavorable development on Russian stock market is that some EU states, such as Greece, Ireland and Spain, acquire such big debts that investors fear of the possibility of their default. Since these countries are active importers of Russian commodities, some investors might find Russia as a risky market for investing. However it must be stated, that the overall situation on Russian market is quite favorable and such factors as high liquidity level, positive situation on the raw materials market as well as the recovery of the overall economy situation will most probably lead to a growth in RTSI index in long-term.


Review by: Stanislavs Filatovs, Rihards Garančs, Vadims Pikarevskis, Vladislavs Voicehovičs, Rihards Zauers