Events on the currency market developed rather calmly. Early in the week, the ruble rate lost 3 kopecks following news of the freeze of a 40% stake in YUKOS. In the second half of the week, the dollar gradually gave way and when all was said and done lost 11 kopecks. “The main reason which led to the fall in the dollar was exporters selling huge amounts of their revenues. The hard currency entering the market has reached its peak, as contracts for `black gold’ have a three-month deferment and the highest oil prices came in July and August,” explains Yuri Kiryanov, Director of the Dealing Department at KB Moskommertsbank. At the same time, market players did not feel any shortage of rubles. Correspondent accounts ranged from 124-142 billion rubles, and the short-term IBC rate fell from 10% early in the week to 2-3% at the week’s end.
The ruble bond market reacted only sluggishly to the YUKOS Affair. After a slight decline early in the week, GKO-OFZ prices readjusted themselves and for the rest of the week remained fairly stable. “Overall this segment is staying outside the market situation. The problem is that the majority of conservative investors are not interested in these bonds due to their low yield, while more speculative investors don’t want to get involved in trading due to the incredibly huge spread between purchase and selling prices,” notes Dmitri Dudkin, a debt analyst at the NIKoil Financial Company.
Investors on the corporate and sub-federal ruble bond market, on the other hand, have not gone into hibernation. The prices for top-tier corporate bonds jumped around despite light trading. On Monday and Tuesday the market waited to hear the results of the Moscow municipal bond auction. Despite the fact that bonds placed well (the entire 5-billion-ruble issue was placed at 10.7%), the market did not react at all. “Before the long holiday weekend, in the context of general instability, investors bought second- and third-tier bonds (in light industry, for example), preferring short-term to long-term,” recounts Ekaterina Leonova, an analyst at Alfa Bank.
Last week the Eurobond market saw serious declines, and toward the end of the week, investors began to snatch up the now less expensive bonds. As a result of the spread between Eurobonds and US Treasuries fell by around 20 points. However, the potential for Russian Eurobond growth, believes Dimitri Dudkin, has practically run out: in the medium term, the market will see an increase in yields.
The stock market last week was nervous and volatile. The RTS Index shot up from 506 last Friday to 560 at the beginning of the week. By the end of the week, however, the index fell to 540. “While early in the week the biggest piece of good news holding up the stock market was Khodorkovsky’s resignation, two days later Minister of Natural Resources, Vitali Artyukhov, announced the possible retraction of YUKOS and Sibneft’s licenses and sent the market downwards,” describes Kirill Tremasov, an analyst at Bank of Moscow. Later the president recommended that the government not retract the licenses and the shares of Russian companies went up in price. However, investors will have a hard time keeping their optimism over the weekend; they are simply too shaken by the YUKOS Affair. Investors are unwilling to buy and seem to have no intention of selling, either. The leaders on the market this week were Surgutneftegaz and Rostelekom, gaining 24% and 13% respectively.

The Financier’s Date Book

November 12 Kamaz Finance and Nortgaz Finance place 1.2 and 2.1 billion rubles in bonds respectively

November 13 Probiznesbank places 0.5 billion rubles in bonds

November 19 Sun Interbrew releases its third quarter results according to international standards

Mid-November Severstal announces its results for the first quarter of 2003 according to international standards