The Russian stock market is preparing to begin growth

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Last Tuesday, the main Russian stock indices Mosberg (-0.36%) and RTS (+0.29%) closed higher after mixed with a moderate deviation in relation to the levels of the previous closing. In the first hours of trading, they are rather subsided. However, an unexpected improvement of the external background has allowed them to pare its intraday losses. The impetus for the upsurge of purchases in the Russian share was the news that the United States will postpone the introduction of the previously declared customs import duties on several Chinese products from September 1 to December 15. This news is interpreted as a positive message in favor of resolving the protracted conflict between the US and China.
Add that this news threw up significantly and oil prices. Futures for Brent crude yesterday easily surpassed the closest significant price level of $60 per barrel and stay above that mark. To speak of them held medium-term upside reversal would be premature. However, a good chance for realization of such a scenario still exist.
As for the indexes Mosberg and RTS, the medium-term technical picture in them at the end of yesterday’s trading remained neutral. They still held above their several weekly and two-month lows.
At the close of formal trading session September futures on the RTS index (RIU9) went into a state of contango with a value of 5.7 points, or about 0.4% relative to the reference indicator. Futures market participants were once again close to neutral evaluation of the medium-term prospects of the RTS index.
On the background of a moderate decline in the index Mosberg held at the end of the day, the most liquid stocks ended mostly lower in the range of 1-3% relative to the levels of the previous close. The last day was poor with significant corporate news. Therefore, significant movements in individual securities were technical in nature or were associated with the events of the previous days.
Noticeably weaker the market closed shares of a number of mining and exporting businesses that are not related to the oil and gas sector: GMK Norilsk Nickel (GMKN RM, is 1.10%), ALROSA (ALRS RM, -3.17%), Severstal (CHMF RM, -1.61%), MMK (MAGN RM, -2.72%), Polymetal (POLY RM, -2.47%), Mechel-Pref (MTLRP RM, +1.21%). Yesterday’s loss of interest in him was legitimate. This contributed to the emerging correctional strengthening of the ruble and a sharp improvement in sentiment in the oil market.
Add that to the rapid decline of ALROSA shares in addition to those factors had to do with corporate news. The findings in USA auction for sale of diamonds of special sizes there was a slight decline in demand.
Earlier, the mining company published a semi-annual accounting statements of the company, which showed a decrease in revenue of 29%. Net income in rubles for the same period fell by 30%. Against this background, shares of ALROSA is very close to its two-year low. Since the beginning of this year, they lost in the price about 30%.
Among the most liquid stocks significantly stronger than the market was closed the papers Sberbank JSC (SBER RM, +0.40%). They were supported by substantial evening strengthening of ruble. Meanwhile, in the first half of the day, they was too close to important psychological and technical level 220 RUB Drawdown below this level would form a technical signal in favor of closing “long” positions and further play on the slide. Similar technical pattern was formed and in the securities of Sberbank-AP (SBERP RM, -0.07%). They managed to hold above next support level, located near 193 RUB.
A notable event in the second tier was a strong intraday rise in the value of securities of the Lenzoloto JSC (LNZL RM, +13.51%), the Lenzoloto-up (LNZLP RM, +8.58%). A surge of purchases in these shares took place with a noticeable delay compared to a two-month rise in the price of gold. However, the likelihood of further significant growth in the value of these securities is questionable given the unpredictable dividend policy of the Issuer. The company “Lenzoloto” has a number of assets in the gold mining industry, but is not engaged in an independent precious metals production and other industrial activity.
This morning the futures on US stock indices show a slight fall in value within 0.1% after yesterday’s strong gains. Similarly, contracts for Brent crude fell 0.9% after the evening take-off. Gold futures lost 0.2%. Chinese stock index Shanghai Composite rose 0.6%. Nikkei225 rose 0.9%.
The external background before bidding in Russia can be characterized as uncertain or mixed. It pays conditions for a neutral open on the local stock market.
The index Mosberg with a moderate deviation in the range of 0.1-0.3%, near the mark 2680 p. as the nearest supports will be the levels 2670, 2660 p. Significant resistance will remain level 2690, 2700 p.
After a neutral opening, the index Mosberg with the big share of probability will go into a state of lateral movement. This contributes to mixed this morning as the external background.
In the afternoon, the main external reference point for participants in the local trading will remain the dynamics of oil prices. The most significant external statistic will be a weekly change in stocks of oil and oil products from the US Department of energy (17.30 GMT).
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Vitaly Manzhos,
Senior risk Manager,
IR “Algo Capital”