The ruble continues to grow

The stock market is tired of politics

In

In the first half of last week, money market participants tried to play off a weak dollar, thanks to the its position on world currency markets, the influx of dollar earnings, and a tense situation on the money market (the IBC rate rose to 11%). Only the Central Bank kept the “bear” mood in check. On Monday, as usual the bank stepped back and the ruble gained 4 more kopecks. In the second half of the week, ruble liquidity returned to normal. The IBC rate went back down to 1-2%, and correspondent accounts rose to 157 billion rubles. In the days that followed, the dollar rate fluctuated slightly around its previous level and trading was relatively light.

On the GKO-OFZ market last week prices rose slightly in the context of fairly active trading. The daily average for trade volume ranged from 250-350 million rubles, somewhat higher than the week before. As ruble liquidity improved and the ruble continued to grow stronger, prices for the majority of federal ruble bond issues went up. Demand for medium- and long-term bonds (maturing in 2005-2018) was highest, while on the short-term segment sales predomited. “We believe that investors’ positive attitude will continue into the coming week and that the market will continue its smooth growth with medium liquidity,” says Mikhail Avtukhov, Director of the State and Corporate Bond Division at Guta Bank. “Low rates on the IBC market will allow for this, as will the expectation that growth rates will increase after the parliamentary elections.”

Last week, more liquid bonds continued to grow on the sub-federal and corporate market. “Foreign market players were the main buyers, who due to a lack of quality primary offerings were forced to supplement their portfolios with bonds from the secondary market,” recounts Anastasia Shamina, an analyst at Zenit Bank. “At the same time, Russian investors are taking more a more conservative stance as the time for determining financial results at the end of the year approaches.” As a result, liquidity on the secondary market, usually reserved for Russian investors, was not high.

The YUKOS conflict has had a negative effect on the market for Russia’s sovereign debt. On Friday, the most liquid instruments maturing in 2030 lost 63 base points. Sunday’s elections only added to investor caution, and trading remained light. Vneshtorgbank’s Eurobond placement held up the market somewhat, and by the end of the week the price for Russian Eurobonds adjusted itself and increased.

Despite an overwhelming amount of bad news the Russian stock market performed relatively well and the RTS rose by 1%. “Investors reacted fairly calmly to the news of the suspension of the Sibneft-YUKOS merger and the Tax Ministry’s announcement regarding the astronomical fines and taxes YUKOS owes,” notes Yuri Makeyev, an analyst at IT Invest. The only aggressive sales were of YUKOS shares, the only liquid shares to experience a decline for the week (-8%). Sibneft on the other hand grew by 6.9%. RAO EES and Surgutneftegaz also ended up among the leaders, gaining 7.7% and 7.2% respectively. The significant increase in trading in EES stock indicates that strategic investors have again become interested in the energy holding company. Surgutneftegaz’s success this week is connected to its anticipated receipt of a permanent license to work the Talakan deposit.

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