The Russian stock market on the verge globalnogo the flight of investors

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Last Friday, the main Russian stock indices Mosberg (-2.00%) and RTS (-3.95%) ended with a strong decrease towards the levels of the previous closing. Dollar-denominated RTS index again showed a rapid drop amid strong depreciation of the domestic currency. For this reason it has updated its two-month minimum. If to speak about the ruble’s index Mosberg, it still found support at near its week low, in the area of 2670 n. In the case of drawdown below the selected level it will form a signal for further play on the slide.
It is quite obvious that fresh sanctions news has had on the domestic stock market is more pressure than season the dividend cut. This seems logical since the dividend gaps in the stock are the result of positive state of Affairs in the companies-issuers. At the same time, new external restrictive measures could lead not only to deterioration of the real sector of the domestic economy, but the rapid outflow of capital from the local stock market.
On Friday it became known that the US President has signed a decree toughening sanctions against Russia under the pretext of use of chemical weapons. Such measures had been expected since November last year. Now existing sanctions threats partially implemented. But this does not mean that the probability of introduction of new restrictive measures removed from the agenda. We are witnessing just another manifestation of the long-term negative trends.
A negative role for the Russian stock market was played by the deterioration in the external background associated with the extension of the trade war between the US and China. Donald trump operates under the strategy of “carrot and stick”. He threatened another increase in customs duties on Chinese goods from September 1 and is now “eagerly” awaiting the continuation of trade negotiations.
At the close of Friday’s evening trading session September futures on the RTS index (RIU9) went into a state of contango with a value of 3.6 points, or about 0.3% relative to the reference indicator. Futures market participants were close to the neutral rating of the medium-term prospects of the RTS index.
On the background of the decline in the index Mosberg held at the end of the day, the most liquid stocks ended mostly lower in the range of 1-5% relative to the levels of the previous close.
The leaders of the fall among the blue chips again made of paper Sberbank JSC (SBER RM, -3.79%), Sberbank-up (SBERP RM, -2.57%). They once again demonstrated the weakness characteristic of them in moments of sharp weakening of the ruble.
The shares of the MMK (MAGN RM, -4.63%) continued rapid decline, the trend on Thursday. The current wave of sales have generated after the recent publication of the controversial consolidated financial statements of the Issuer in accordance with IFRS. The news that the company may pay dividends for the 2nd quarter in the amount of RUB 0.69 failed to keep these papers from a heavy fall. While they found some support on approaches to significant price level of 40 RUB.
The only liquid paper, completed Friday’s session with a noticeable increase became preferred shares of Surgutneftegas (SNGSP RM, +1.01%). In moments the sharp depreciation of the ruble, they have traditionally played the role of the protective tool. This is due to the fact that the oil company has a large accumulation denominated in foreign currency.
For a similar reason significantly better than the market traded securities, Mobira (MOEX RM, -0.10%). The income of the organizer of trading does not directly depend on fluctuations in oil prices and the exchange rate of the domestic currency. Moreover, the increasing market uncertainty to some extent increases the activity of the bidders, and the growth of fee income. By the way, at the end of last week the Moscow stock exchange has summed up the results of bidding in July 2019. Their total volume for the period amounted to 72.1 trillion rubles. For comparison, in June the figure was 66.1 trillion in may – 61.0 trillion rubles in April – 73.8 trillion rubles.
Much stronger index Mobimii also closed papers of Polyus (PLZL RM, +1.23%), Tatneft-AP (TATNP RM, +1.17%), M. Video (MVID RM, +0.12%), RusHydro (HYDR RM, +0.02%), Polymetal (POLY RM, +2.38%), PhosAgro (PHOR RM, +0.88%).
This morning the futures on US stock indices show a strong decline in the value, which is more than 1%. Contracts for oil grade Brent fell by 1.2%. Gold futures rose in price by 0.6%. Chinese stock index Shanghai Composite decreased by 1.0%. Nikkei225 declined by 2.0%.
The external background before bidding in Russia can confidently be described as negative. This creates conditions for the opening of index Mosberg with a noticeable decrease.
We expect a negative opening index Mosberg with a significant drawdown of up to 1%, close to 2650 p. as the nearest supports will be the levels, 2640, 2630 p. Significant resistance is seen around 2680, 2690 p.
In the first minutes of trading, the index Masuri will play a continuing deterioration in the external background. After opening with a big gap down it can go into a state of consolidation.
In the afternoon members of the local trades will focus on dynamics of the main Western stock markets and oil futures. Indirect influence on the course of trading in Russia may have a publishing unit of statistics in the United States at 17.00 GMT. Among other indicators it will include the July index of business activity in the nonmanufacturing sector.
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Vitaly Manzhos,
Senior risk Manager,
IR “Algo Capital”