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
2010-09-22 10:36:01
EUR/USD 0.8005
EUR/LVL 1.4134
EUR/LTL 0.2896
EUR/EEK 0.0639
EUR/SEK 0.1044
EUR/RUB 0.0265
Indices: / OMXR 0.00% / OMXV 0.00% / OMXT 0.00% / OMXS30 0.00% / OMXH25 0.00% / RTS 0.00%                     Stocks: SKF-B 0.00% / CHMFS 0.00% / SSAB-A 0.00% / LKOHS 0.00% / OUT1V 0.00% / SKF-B 0.00% / CHMFS 0.00% / SSAB-A 0.00% / LKOHS 0.00% / OUT1V 0.00%                     Porfolios: xxx 0.00% / matas 0.00% / iFund 0.00% / warkes 0.00% / pirmas 0.00%
 

RTS (Moscow) - Russian Stock Market Overview

Year: 2010 Week: 9

Week 9 was an odd week for Russian Stock Markets. Due to public holidays in Russia it lasted for four days: from Wednesday till Saturday. The week ended with a slight drop with RTS index declining by 0.49%. RTS index closing value last Friday was 1423.13 points and this Saturday RTS index closed at 1403.93 points. RTS index had significant fall on Thursday, which lasted till the mid day. Afterwards it was rising proportionally until the end of Friday, and ended with basically no activity throughout Saturday. Telecommunication and industrial shares experienced biggest improvements this week (3.41% and 3.46% respectively), while oil & gas sector rose only by 0.53%. As Russian indexes are very sensitive to oil and commodity prices we assume, the positive growth was driven mostly by rising oil prices, which climbed almost to 80$, and by news about an increase in commodity production. The causes of the rapid downside on Thursday could have been slight oil price decrease by 2 $, negative news from Greece and an announcement of two big oil companies merger. Schlumberger Inc. bought Smith International shares worth 11 billion $ in that way increasing geographical coverage, which jeopardized Russian oil companies' competitiveness. This week's winner was Surgutneftegas (SNGSPS) preference shares (+4.54%) followed by FGC UES (FEESS) with 3.58% gain and Polyus Gold (PLZLS), which rose by 1.46%. The last three stocks were: Uralkaliy (URKAS) with drop of 3.85%, Sberbank (SBERS), which fell by -4.82% and Uralsvazinform (URSIS) closing the bottom list with 7.29% negative growth.
 
 
Chart 1 RTSI index in week 9. Source: tikr.ru
 
Surgutneftegaz is one of the largest Russian oil and gas companies. It mines 13% of all oil and 25% of all gas mined in the country. During the week its preference shares SNGSPS increased by 4.30%, reaching 0.3668 EUR. On Friday the whole Russian stock market rose on positive macroeconomic data from USA and Eurozone. Moreover, USA GDP for 4th quarter of 2009 turned out to be better than predicted, which also improved mood of investors. SNGSPS rose by 4.7% during the day. Outstanding growth of SNGSPS, if compared to other securities in oil and gas sector, can be attributed to the started season of annual dividend payments. Dividends for preference shares assume fixed dividend yield, which is traditionally high for the given stock. Dividend yield is the fixed ratio of annual dividend per share to the price of shares. For SNGSPS it is about 7%. Overall, it is very likely that demand for high dividend yield stocks will remain high in the coming weeks and SNGSPS price will rise even more.  
 
 
Chart 2. SGSPS in week 9. Source: tikr.ru 
 
The week’s biggest loser is Uralsvyazinform (URSIS) whose share value decreased by 7.29%. URSIS opened the week at 0.0221 EUR and closed it at 0.0199 EUR. Uralsvyazinform is the largest provider of telecommunications services in the Urals region, Russia. Uralsvyazinform share in RTS market acts very strangely. Trading volume of the stock already since October 2009 shows the same pattern: every third day 60 million shares are sold with trading volume in other days rarely exceeding 1 million shares (look in a chart below). It seems that a big shareholder is disposing his position and someone else is buying the stock in similar amounts. Conclusion: share price is heavily dependent on a few very big players’ willingness to buy and sell, thus predictive power is relatively low. Therefore we recommend being very careful with this stock; better stay away from it unless you spot significant divergence from fundamentals.
 
 
Chart 3: URSIS trading volume. Composed by authors using data from rts.ru
 
The second worst performing stock on Russian stock market this week is Sberbank (SBERS), one of the leading banks in Russia, which stock experienced a 4.15% decline in value. Last week at the end of Friday’s trading session its share’s price was 1.9453 EUR, while this week on Saturday, February 27, the closing value of the stock was 1.8646 EUR. The biggest decline in share’s value happened at the beginning of the financial week, which happened on Wednesday, February 24, when the price was falling up to Thursday 17.30 when it reached the two-month-low of 1.7976 EUR. Afterwards, the price has partly recovered and fluctuated around 1.84 EUR till the end of the week. Such a sharp decline is mainly caused by overall negative background, including worsening situation in the southern EU member states and unexpectedly sharp decline in consumer trust in U.S economy.
 
Chart 4: SBERS in week 9. Source: tikr.ru

We are expecting that next week could be similar to this one – mostly small increases in share prices. This is due to government debt problems in some EU member states, strengthening greenback, and recent oil price rally. Foreign macroeconomic background remains negative. But the leading foreign financial and commodity grounds are still showing slightly positive mood. We think that oil prices will continue to rise and by the end of next week they will probably have similar price gain. Therefore there is a reasonably high possibility of modestly positive dynamics in the Russian stock market next week.


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