Russian stock market opens with small growth

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Last Thursday, the main Russian stock indices Mosberg (-0.15%) and RTS (+0.03%) ended with a slight directional deviation in relation to the levels of the previous closing. They spent the trading day in as unprincipled consolidation within fairly narrow ranges. It was promoted by an ambiguous external background and publication of a large number of important foreign statistical indicators, which in General were mixed.
Futures for Brent crude yesterday managed to update my monthly maximum, what appears to be a positive signal for the local stock market. However, their last increase was quite modest. We add that this week the oil market have received several alerts that supported the price of “black gold”. In addition to the strong drop in weekly crude inventories in the United States and to talk about possible reduction of deliveries of oil from Iran, became aware of the worsening political turmoil in Libya. In this regard, there was talk about possible restriction of export of oil from terminals under the control of the unrecognized Libyan government.
If to speak about foreign policy as the background, then the last day brought some positive news. It was announced that on 16 July in the capital of Finland will host a meeting of presidents of Russia and the United States. This creates some hope for a warming of bilateral relations. Besides, yesterday it became known that the French law enforcement authorities dropped all charges against a member of the Federation Council Suleiman Kerimov. Previously he was suspected of tax evasion. Given the current nature of relations of Russia with the “collective West” this can be interpreted as a very positive sign.
At the close of formal trading session September futures on the RTS index (RIU8) came in as a moderate backwardly size to 11 points, or about 1% relative to the reference indicator. Thus, the futures market participants remain negative assessment of the medium-term prospects of the RTS index.
On the background of a slight fall in the index Mosberg held at the end of the trading day, the most liquid stocks ended mixed with an irregular deviation in the range of 1-3% relative to the levels of the previous close.
A modest leader of growth among blue chips, made of paper VTB (VTBR RM, +1.01%). They continue to react to the recent publication of positive consolidated financial results of the Issuer in accordance with IFRS for may and five months of the current year. A credit institution reported on the increase in net income YTD 73.9% compared to the same figure for the 5 months of 2017. By the end of may month its net profit rose by 31.8%.
From a technical point of view, the VTB develops corrective technical bounce from long term support level, located near the 0.045 RUB Now they have the potential to recover in the middle part of the seven-month range, i.e. in the area of 0.05 RUB. this May take from several days to several weeks.
Shares of Polyus (PLZL RM, +5.88%) has risen sharply amid news that French police no longer have any claims against the member of the Federation Council Suleiman Kerimov. Activation purchases shares in a gold company is that it is under the indirect control one of the immediate family of a Senator.
Much worse market yesterday traded liquid shares of steel companies: NLMK (NLMK RM, -3.32%), MMK (MAGN RM, -3.32%), Severstal (CHMF RM, -1.61%). A clear weakness of these securities has been observed since mid-June. They have hosted the closing of register of shareholders for annual dividend payments. So a temporary loss of interest in those papers looks quite natural.
Noticeably weaker market also closed paper Tatneft JSC (TATN RM, -2.40%), Tatneft-AP (TATNP RM, -1.44%), Aeroflot (AFLT RM, -0.96%), Transneft Pref (TRNFP RM, -1.20%), clA Yandex (YNDX RM, -1.53%).
Before you start trading in Russia the futures for US stock indices significantly increased in value within 0.5%. Contracts for Brent crude fell by 0.1%. Gold futures rose 0.2%. Japanese stock index Nikkei225 has slightly increased. Hong Kong’s Hang Seng added 1.2%.
The external background before bidding in Russia can be characterized as moderately positive.
The index Mosberg with a moderate increase of about 0.3%, in the range of p. 2255-2260 as the nearest supports will be the levels of 2250, 2240 p. Significant resistance will once again become the mark 2270, 2280 p.
· After a moderately positive start of trading the index Mosberg can go into a state of consolidation is slightly higher than 2250 p. morning Moderate improvement of the external background yet does not contribute to aggressive purchases of Russian shares.
· In the second half of the day in Europe and the United States held the publication of a large number of important statistics, which in General can have mixed. Some negative factor for the local stock market is able to make statements on foreign policy towards Russia on the part of today’s summit of EU leaders.
Vitaly Manzhos,
Senior risk Manager,
IK “Nord Capital”