The Russian stock market: Investors are not impressed with the report of Sberbank

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Index Mosberg closed higher on symbolic 0.3 percent on the level of 2359 points, while the RTS dollar due to the strengthening of the ruble gained 0.5% to 1131 points. The market is quiet before the election in the U.S. Congress that may affect the prospects for the adoption of sanctions senators, which include a clause prohibiting payment in dollars for state banks. Until 11 November, will have one or two meetings trump and Putin.
The external background by the end of the day was positive: the American S&P 500 added 0.75 percent, while the European STOXX 600 grew by 0.43%.
The index of business activity in industry of the PRC from Caixin in October was 50.1 points, it was expected at 49.9. The number of initial claims for unemployment benefits in the U.S. last week amounted to 214 thousand 213 thousand was expected the Key rate of the Bank of England remained unchanged – 0.75% per annum.
In Russia among the sectoral indices today, the worst result recorded by financial sector (-0,16%), outperformed the market metallurgists and mining (+0,38%). Among individual securities, the growth leaders were “Yandex” (+4,3%), X5 (+3,9%) and NOVATEK (+3.1 percent). The outsiders were “Enel Russia” (-1,7%), OGK-2 (-1,3%) and Gazprom (-1,3%).
Rostelecom (JSC: +0,43%) reported for the 3rd quarter. Revenue gained 5% year-on-year to 79.4 billion rubles, and the OIBDA Margin was up 1.4 percentage points year-on-year to 34.4%. Net profit rose 46% to 5.7 billion RUB as a Key reason for the improved margin was the control of personnel costs. Net income was also impacted by a reduction in debt service costs. The company’s debt (in relation to 12 months. OIBDA is 2.0) is fully nominated in roubles and the cost of its maintenance cumulative falls as refinancing (following the decrease in the rate of the Central Bank of the Russian Federation). In addition, unlike last year, the company does have a formal loss from associated companies amid losses from Tele2. Simultaneously with the publication of the report was announced interim dividends for 9 months. 2018 in the amount of 2.5 rubles per share.
Interim dividend yield for ordinary shares will amount to 3.6% per annum, and on the preferred shares and 4.3% per annum. However, it is unlikely that the company will be able to radically increase the amount of dividends paid in the foreseeable future because of future expenses for the “law of Spring” (including Tele2, they can be up to 8-10 billion rubles per year).
Sberbank (down 0.6%) reported for the 3rd quarter. Net profit rose +1.8% year-on-year to 228,1 billion. Despite the growth of net interest income by 3.2% and fees of 17.7%, the dynamics negated the increased operating income and expenses creation of reserves. In the end, the return on equity fell from 28.4 percent to 25.5%. The increase in the key rate of the Central Bank yet have little effect on interest margins. The value of retail deposits in Q3 remained at the level of the 2nd quarter and amounted to 4.6%.
The cost of corporate deposits in Q3 increased by 40 b. p. to 3.4%. The Bank might raise the key rate of the Central Bank of the Russian Federation in December, which, apparently, worsen opportunities for funding.
Oil major varieties by the evening became cheaper within 2.6%: a barrel of Brent cost $73,1; while WTI of $63.6. According to Reuters, OPEC countries in October increased its production to the maximum in 2016, the actions of the UAE and Libya outweighed the reduction in Iran.
In the foreign exchange market United States dollar the evening lost 0.3 percent to 65.7 rubles, while the Euro grew by 0.4% to 74.9 RUB Here is nothing new, the market is waiting for the outcome of numerous geopolitical events, announced at the beginning of November, reflecting the balance of expectation of their realization.
In the evening possible growth of quotations of futures on index Mosberg due to external background, and the ruble may weaken under the influence of the commodity market.
Timur Nigmatullin,
“Opening Broker”