In the course of the week the dollar rate continued in its downward trend and lost 3 kopecks overall. While the dollar plummeted on world markets, events on the Russian money market unfolded calmly. Market participants did not sell their hard-currency revenue very aggressively and the Central Bank is buying up any extra hard currency. The market also experienced no ruble deficits, and the IBC rate fluctuated from 1 to 3%, as correspondent accounts remained high (107-127 billion rubles). “For the moment there is no reason to believe that the Central Bank will change its policy toward a stronger ruble, in that holding back the exchange rate has not required significant ruble interventions over the past weeks and did not have a major effect on the money supply or inflations,” believes Ivan Manaenko, an analyst at Veles Capital Investment Company.
In the first half of the week, investors on the domestic federal bond market were extremely inactive and quotes moved in various directions. “Market participants were anticipating the auctions of additional OFZ-AD 45001 and 46001 bond issues and the coupon redemption and repayment of OFZ 27012,” recounts Mikhail Avtykhov, Director of the State and Corporate Bonds Operation Division at Guta Bank. “For this reason, before Wednesday the situation on the market was characterized by light trading with sales in issues in the placement process predominating.” Additional tranches were placed with a premium for the secondary market. After Wednesday, the trend on the market stayed flat, but with slightly upward character.
On the sub-federal bond market, most trading took place in Moscow bonds and the Khanti-Mansi Autonomous District’s fourth issue (as the district administration announced plans to buy back the bonds). There was no unified trend and the market consolidated at previously achieved yields. A flat trend predominated on the corporate bond market. In the first half of the week, quotes for the most liquid issues increased, but after rumors appeared that law enforcement agencies had put several large companies under constant surveillance, selling came to the fore.
Early in the week, optimism prevailed on the Russian foreign debt market. The growth in prices for Russian Eurobonds was supported by American T-notes’ upward trend. In the second half of the week, profit fixation occurred, spurred by increasing concerns about Russia’s political stability.
The events surrounding YUKOS continue to have a strong effect on the stock market. Early in the week, trading fell to the low level characteristic of holidays. However, investors could not hold out for long and already by mid-week, the market was struck by a wave of sales. Stock quotes began to plummet as market activity increased. The decline affected all liquid stocks without exception. On Tuesday the market without much effort fell below 500 points according to the RTS Index and kept going down. For the week as a whole, the RTS lost 9%, and RAO EES shares fell most rapidly, losing 15.8%. “By the looks of things, strategic investors are in no hurry to start buying up the energy giant’s shares until they hear about the conditions for power generation assets auctions. In a situation like this, the portfolio investors are trying to get rid of their EES shares, creating an advanced decline in their price,” believes Yuri Makeyev, an analyst at IT Invest. The company’s weakness also had a negative effect on Mosenergo stock, which fell by 12.6%. YUKOS also lost almost 12%.

The Financier’s Date Book

November 26 Baltika releases its report for the third quarter of 2003 according to the US GAAP

November 27 Tver Province places 1 billion rubles in bonds, and the city of Nizhny Novogorod places 0.3 billion.

December 2 MTS releases its reports for the three quarters of this year according to the US GAAP

December 3 Krasnoyarsk Territory places 1.5 billion rubles in bonds