The Russian stock market is ready to grow up a little

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Last Friday, the main Russian stock indices Mosberg (+1.32%) and RTS (+0.90%) ended with a significant increase in relation to the levels of the previous closing. Thus, they continued its corrective bounce from recent four-month lows. This was facilitated by morning the improvement of the external background.
Held mid-day drawdown of cost of oil futures has not been able to spoil the positive mood of the members of the local trades. After the recent extreme movements, it didn’t look critical.
Some optimism inspires the fact that futures on Brent crude managed to hold above the crucial price level of $50 per barrel. Slide below this level would be a clear medium-term negative for the oil market and for the local stock market.
It is worth noting that despite all the market turmoil and hope, indices Mosberg and RTS come to the end of the year with quite moderate bi-directional deflection. The outgoing year was good for range trading, but is clearly not pleased investors and speculators betting on a long-term trend movement. A significant positive factor for them was only 35 percent increase in industry index of Oil and gas. Metals and mining also added a little more than 8% since the beginning of this year.
Thus, from a sector perspective, the most effective strategy in the past year became a conservative bet on the basic sectors of the Russian economy. As we can see, the real value present in shares of commodity companies focused on exports.
At the close of formal trading session, the March futures on the RTS index (RIH9) went into a state of contango size 12 n, or about 1.1% relative to the reference indicator. Futures market participants retain a positive assessment of the medium-term prospects of the RTS index.
On the background of a substantial increase in index Mosberg held at the end of the trading day, the most liquid stocks ended mostly higher in the range of 1-3% relative to the levels of the previous close.
Much stronger market yesterday closed paper Tatneft JSC (TATN RM, +2.90%), Tatneft-AP (TATNP RM, +2.94%). Most likely, their rapid growth wore corrective in nature. These shares are quite far away from its summer highs. So after the December wave of sales they were at attractive price levels. The same can be said about significantly ahead of the market papers NLMK (NLMK RM, +3.30%). Will add that nice dividend present to shareholders “Tatneft” and “NLMK” will be the imminent closure of registers of shareholders for dividend payments. These papers will be the last day to bargain with the interim dividend of 4 Jan.
Shares of Gazprom (GAZP RM, +1.54%) used the raised demand against the backdrop of reports that the Issuer for the third year in a row it updates a historical record of deliveries of gas for export to the far abroad. At the end of the year this figure will exceed 201 billion cubic meters.
The shares of AFK Sistema (AFKS RM, +1.91%) outperformed the MICEX index amid reports that the Issuer has acquired the share package of JSC “Pharmaceutical company “Obolensky” in consortium with VTB Bank and the management of most pharmaceutical companies. The effective share of the “System” in the enterprise will amount to 11.7%, while investments in the amount of 1.83 billion rubles.
Buying shares in new promising asset looks quite logical step for the joint Finance company in the light of the expected sale of a controlling stake in the retail network “Detsky Mir” (DSKY RM, +0.22%).
Noticeably weaker market yesterday traded shares of Bank VTB (VTBR RM, -0.41%). They were not able to support the publication of positive financial statements of a credit institution in accordance with IFRS for November and the 11 months ending November 30, 2018. Meanwhile, the net profit of the VTB Group since the beginning of the year increased by 65.9% and amounted to 163.9 billion rubles In November 208, the net profit of the Group increased by 51.9%, to 12 billion rubles.
Worse than the market also closed paper ALROSA (ALRS RM, -0.21%), Mobira (MOEX RM, -0.91%), Surgutneftegaz-Pref (SNGSP RM, -0.22%), Inter (IRAO RM, -0.82%), Mosenergo (MSNG RM, -0.99%).
Today, working Saturday, the local stock market will be insulated from the influence of the external background. Major stock indexes in the U.S. closed yesterday neutral. However, the evening increase in the cost of oil futures and contracts on stock indices of RTS and Mosberg, creates the conditions for a moderately positive start of trading in Russia.
• The index Mosberg with a moderate growth of the order of 0.3-0.5%, in the district 2365-2370 p. as the nearest supports will be the levels of 2350, 2340 p. Significant resistance is seen around 2380, 2390 p.
• After a moderately positive start of trading the index Mosberg can go into a state of unprincipled consolidation. This is due to its complete isolation from any external signals and the presence of non-residents. In addition, trading volume will be low because of the approaching Christmas holidays.
• In the second half of day the Russian stock market will be even more thin. Therefore, members of the local trades can only rely on the visible speculative moves in some papers.
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Vitaly Manzhos,
Senior risk Manager,
IR “Algo Capital”