Daily Review. 3rd July, 2009

Russian equities retreated Thursday on falling oil prices and downbeat US economic data fueled negativity in the second half of the session, with the RTS Index losing 1.79% and the MICEX Index plunging 3.50%.

A contraction in oil futures dragged down domestic oil and gas names, as Gazprom sagged 5%, Rosneft tumbled 3% and Lukoil declined 3.6%. Banking issuers dropped in line with the market, with Sberbank giving up 4.1% and VTB pulling back 3.3%. Steels were mixed, but outperformed intraday on expectations China’s demand for steel would grow and favorable metal prices, as MMK edged down 0.3%, NLMK rallied 5.1% and Severstal dipped 0.3%.

Bearish sentiment prevailed in US trading Thursday, with the S&P 500 Index taking a 2.9% drop. Market players were disappointed by unemployment data showing a much higher-than-expected decline in US jobs. Against this backdrop Asian indices are heading south now. US jobless data also exerted an adverse impact on crude prices, with Brent contracts currently hovering around USD 66.50 per barrel.

We think Friday morning’s news flow is unfavorable for the Russian stock market and the benchmarks are likely to gap down at the open. An uptrend in US index futures could slightly buoy the market, but falling oil prices will put heavier pressure on O&G names. As for the market drivers, we’d like to highlight EU retail sales numbers due out at 1.00 pm Moscow time. As American exchanges are closed for Independence Day celebrations today, domestic trading floors will finish the week without an important benchmark.

Daily Review. 2nd July, 2009

Domestic equity benchmarks turned in strong performances Wednesday amid rallying crude futures and bullishness in global indexes, with the RTS Index edging down 0.92% and the MICEX Index advancing 4.21%.

O&G plays were in hefty demand on rising black gold prices, as Gazprom spiked 6.5%, Rosneft gained 3.1% and Lukoil leapt 3.3%. Domestic banking names traded up in line with the overall market trend, with Sberbank advancing 3.6% and VTB surging 7.3%. Quite unexpectedly, MMK outperformed the steel segment, leaping 7.1%, while NLMK added a modest 0.6% and Severstal also close 0.6% higher.

US equity benchmarks landed in positive territory Wednesday, although with modest gains (an average 0.5%). The market gained support from economic data, i.e. the Non-Manufacturing Business Activity Index and home sales data, which came in better than expected. Asian exchanges are mixed this morning, with gold miners seeing the strongest demand. After the release of the US mid-week inventory report crude prices crude prices fell sharply, with Brent contracts currently trading at USD 68.50 per barrel.

We think Thursday morning’s news flow is unfavorable for the Russian stock market. A downturn in US index futures and lower crude could put pressure on the market. Sell-offs could be seen in O&G names at the open, while Polyus Gold and Polymetal could outperform on rising gold prices. A batch of macroeconomic data capable of driving the market are due out today. Specifically, ECB’s rate decision is to be made public at 3.45 pm Moscow time and market players anticipate the European Central Bank to hold the rate steady. Unemployment data from the Eurozone and the US jobs report are also due out today.

Daily Review. 16th April, 2009

Domestic equity benchmarks turned bearish Wednesday amid worse-than-expected economic data out of the US, as the RTS Index edged down 0.2% and the MICEX Index tumbled 1.4%. Banking stocks corrected down after having locked in solid gains the day before, with Sberbank plunging 3.7% and VTB sliding 2.7%. O&G names also turned in negative performances, as Gazprom slid 2.1%, Lukoil fell 0.6% and Rosneft declined 3.2%. Sell-offs also hit metal issuers, except for NLMK (up 7.6%), with Norilsk Nickel and MMK dropping 1.8% and Severstal ending 3.1% lower. US indices closed out in the black Wednesday despite weak industrial output numbers, with financials leading the gainers. Asian exchanges are moderately upbeat this morning ahead of JPM’s earnings report. Commodity markets remain quite stable, with industrial non-ferrous metals extending gains and crude futures flatlining. We think Thursday morning’s news flow is mainly upbeat for the Russian market. An uptrend in industrial non-ferrous metals will lend powerful support to Norilsk Nickel. As for financials, the release of JP Morgan Chase’s financial statement in the second half of the day will be a major event. O&G plays will likely be out of investor focus.

Daily Review. 13th April, 2009

On Friday European and American exchanges were closed for Good Friday holiday and in the absence of important drivers from external domestic equity benchmarks posted further gains, with the RTS Index adding 0.8% and the MICEX Index advancing 0.5%. Bullishness in the benchmarks notwithstanding, blue-chip names closed the session on a mixed note. After Thursday’s hefty gains banking names underperformed, with Sberbank inching down 0.1% and VTB dropping 0.9%. O&G names, except for Lukoil (+1.6%), posted fractional fluctuations, as Gazprom was off 0.1% and Rosneft ended 0.3% lower. Norilsk Nickel saw robust demand, leaping 3.8%, as prices for the metal holding’s primary goods stabilized above the price level built into its corporate budget. Steels lagged behind the market, with Severstal slipping 0.7%, MMK dropping 1.5% and NLMK edging up 0.2%. A light news flow this morning sets the stage for an extension of the local uptrend. Current price levels of most liquid names, however, are not that attractive and according to our estimates, the likelihood of a correction within a week or two is fairly strong. That being said, for the time being the market’s confidence that the worst of the global economic downturn is over has stoked investors’ interest in high-risk instruments, especially financials. A firming ruble is sharpening the investment appeal of businesses that target domestic demand, among which we’d like to highlight MTS and Wimm-Bill-Dann.

Daily Review. 3rd April, 2009

Domestic equity benchmarks staged a powerful rally Thursday on the heels of a global rally in anticipation of crucial decisions to be taken at the G20 summit to fight the global financial crisis. As a result, the RTS Index shot up 7.1% and the MICEX Index spiked 6.4%. Thermal gencos led the advancers Thursday, with OGK-2 surging 22.9%, OGK-6 climbing 17.8% and OGK-4 soaring 17%. Financials also outperformed the market, as Sberbank advanced 10.5% and VTB gained 6.6%. O&G names found support from a spike in oil contracts above USD 50/bbl, with Gazprom leaping 7%, Lukoil ending 6.2% higher and Rosneft climbing 8.5%. Steels, except for MMK (+7.5%), slightly underperformed, as NLMK advanced 2.5% and Severstal increased 3.9%.US stock indexes posted gains Thursday on the back of the G20’s decision to dramatically upsize funding to quell the crisis. The S&P 500 Index edged up slightly less than 3%. Asian markets are more moderately upbeat this morning, with indexes up by an average 1%. Reports from London’s G20 summit cheered commodity markets as crude futures rallied back to USD 52 per barrel. Additional support came from a weaker dollar after the ECB decided to decrease its interest rate on main refinancing operations by 0.25%, undershooting the market’s expectations. We think Friday morning’s news flow is neutral for the Russian stock market. Exchanges priced in primary G20 news yesterday and we do not rule out a correction today. With gold sliding to USD 900/oz, precious metal issuers could come under the heaviest pressure, while O&G and banking stocks could find support in crude futures trading above USD 50 a barrel. All eyes will be on the US jobs report due out later today.

Daily Review. 1st April, 2009

With oil futures growing and European trading floors trading in the black, upbeat trends shaped up on the Russian stock market Tuesday, with the RTS Index adding 1% and the MICEX Index closing out 1.3% higher. Bank Vozrozhdenie stood out as the day’s top gainer, up a hefty 14.3%, on unexpectedly strong 2008 financials and 2009 operating forecasts that far exceeded market expectations. Against this backdrop, state-run banks posted gains, with Sberbank leaping 4.2% and VTB rising 2.6%. By the final bell, O&G and metal names ended on a mixed note, with Lukoil edging down 0.8%, Gazprom and Rosneft advancing 1.8%, Norilsk Nickel dropping 1%, MMK edging up 0.8%, NLMK climbing 2.4% and Severstal tumbling 2.1%. US equity benchmarks finished in positive territory Tuesday, adding an average 1%. Automotive stocks came under pressure from growing speculation that filing for bankruptcy is the best solution for them. Mixed sentiment prevails on Asian exchanges today. Commodity markets remained largely flat Tuesday, with oil contracts stabilizing in the range of USD 48-49 a barrel, while most non-ferrous metals posted marginal gains. We think Wednesday morning’s news flow is largely downbeat for the market and we expect the benchmarks to kick off to the downside. The only exception could be financials on the heels of favorable corporate news.

Daily Review. 31st March, 2009

Domestic benchmarks drifted lower Monday under pressure from weakness on European bourses and a retreat in oil futures below USD 50/bbl. As a result, the RTS Index plunged 5.3% and the MICEX Index slid 6.4%.State-run banks led the list of losers, with Sberbank plummeting 11.6% and VTB sinking 9.9%. O&G names were hit by a pullback in global oil prices, as Lukoil shrank 9.1%, Rosneft plunged 8.3% and Gazprom finished 6.8% in the red. Steel issuers slightly outperformed, with MMK dropping 3.2%, NLMK losing 2.7% and Severstal diving 6%. Precious metal plays closed out the session in positive territory, as Polyus Gold gained 5.5% and Polymetal edged up 0.8%. A wave of sell-offs that began last Friday gained traction on American exchanges Monday, with the S&P 500 Index taking a 3.5% drop, while, quite predictably, financials topped the list of decliners. Bullish sentiment prevails in Asian trading this morning on expectations that Japan would enlarge its stimulus package. A rising greenback exerted an adverse impact on commodity markets, with Brent and WTI futures falling below USD 50/bbl and all key industrial metals also moving to the downside. We believe Tuesday morning’s news flow is moderately downbeat for the Russian equity market, and after two days of sell-offs the downtrend could peter out. Banking stocks will likely remain under the heaviest pressure from the external environment. If negativity prevail, precious metal makers look set to outperform, while state support to Russian auto producers could also indirectly impact steels.

Daily Review. 30th March, 2009

A correction gained momentum on Russian exchanges Friday, with major indices losing around 4% each under pressure from falling oil prices and weaknesses on European bourses. Banking stocks saw sizeable losses on worries the environment in the Russian financial sector would deteriorate, with Sberbank sinking 9.5% and VTB plunging 5.6%. Metal issuers posted losses in line with the overall market trend, with Norilsk Nickel plummeting 6%, Severstal declining 4.1%, NLMK pulling back 3% and NLMK edging down 0.7%. Expectations global energy markets would turn bullish continue to provide support for O&G names, as Gazprom dropped 2.5%, Lukoil eased 1.2% and Rosneft lost 6%.The US equity market saw red ink on Friday, with key equity benchmarks dropping over 2% and financials leading the decliners. Asian exchanges also corrected down after hefty gains earlier in the week. Commodities are going down under pressure from a strengthening dollar, with Brent contracts retreating below USD 52 per barrel. A correction was seen in nearly all non-ferrous metals. According to our estimates, Monday morning’s news flow is to a large extent downbeat for the Russian equity market and Friday’s downturn is likely to continue. Banking and metal stocks could come under the heaviest pressure, while the oil patch could gain support from global crude prices, which remain above USD 50 a barrel.

Daily Review. 27th March, 2009

Russian equities were driven by external ambiguity on Thursday. On the one hand, the market gained support from rising index futures in the United States, while, on the other hand, a flow of negativity stemmed from a retreat in oil prices in the second half of the session. As a result, domestic benchmarks ended on a mixed note, with the RTS Index advancing 1.58% and the MICEX Index easing 0.21%. O&G names, except for Gazprom (off 0.9%), outperformed the market despite a pullback in crude contracts in afternoon trading, with Rosneft adding 1.1% and Lukoil jumping 1.3%. After locking in solid gains Wednesday, domestic banking stocks drifted south, with VTB sliding 3.6% and Sberbank dropping 1.6%. No single trend was seen in steels, as MMK was up 1.1%, NLMK dove 6% and Severstal advanced 1%. US benchmarks again posted gains Thursday, as the S&P 500 Index added 2.3%. Optimism stemmed from better-than-expected corporate earnings reports released by some American corporations. Asian exchanges are largely bullish this morning, with commodity stocks back in vogue. After an upswing crude contracts took a drop, with Brent futures trading at USD 53/bbl. According to our estimates, Friday morning’s news flow is largely neutral for the Russian equity market. Profit-taking cannot be ruled out on the last trading day of the week, which could be sparked by a decline in US index futures and lower oil prices, exerting an impact mainly on O&G names.

Daily Review. 26th March, 2009

Domestic equity benchmarks extended their gains on Wednesday after a downturn the day before, with the RTS Index advancing 2.67% and the MICEX Index surging 4.36%.Despite a retreat in crude futures O&G plays headed north in line with the market, as Gazprom gained 3.5%, Rosneft added 3.1% and Lukoil shot up 5.3%. Expectations Gazprom Neft would make a generous stock buyback offer to minorities made the oil producer the day’s standout gainer (up an impressive 14%). Domestic banking stocks outperformed on growing demand for global financials, with Sberbank climbing 8.8% and VTB soaring 9.5%. Steels underperformed amid downbeat conditions on the steel market, as MMK edged up 1.8%, NLMK and Severstal ended flat. Bullish sentiment prevailed on US exchanges Wednesday, with the key benchmarks gaining an average 1%. Optimism came from better-than-expected new home sales and durable goods orders. Asian markets are bullish this morning. A build in US oil inventories had little impact on crude oil futures, with Brent contracts trading at USD 52.50/bbl. We think Thursday morning’s news flow is upbeat for the Russian stock market. Current oil prices could lend support to the oil patch. Continuing demand for global financials could push up the stocks of domestic lenders. Today’s trading patterns could be driven by the release of final US 4Q 2008 GDP figures and also unemployment data.

Daily Review. 25th March, 2009

Domestic equity benchmarks corrected down Tuesday after several bullish run that lasted for several days, with negativity coming from a retreat in oil futures. As a result, the RTS Index dipped 2.11% and the MICEX Index tumbled 4%. A drop in oil prices notwithstanding, O&G plays largely outperformed, with Gazprom pulling back 2.8%, Rosneft sliding 5.4% and Lukoil ending 3.1% in the red. Domestic banking stocks turned from lead advancers into the day’s top decliners, as Sberbank dove 8.1% and VTB sank 6.5%. Steels also underperformed the market, with MMK plunging 7.9%, NLMK plummeting 10.3% and Severstal sinking 7.4%. Norilsk Nickel lost 10.9% of its market value on reports that some of the metal giant’s transactions are being audited. US equity benchmarks trended down an average 2% on Tuesday after Monday’s rally and also under pressure from the Fed chairman’s remarks that new mechanisms need to be worked out to regulate financial companies. Asian exchanges are mixed this morning and some negativity came from data showing a sharp reduction in Japan’s exports. Crude contracts fell marginally on investors’ expectations of a build in US crude inventories. We think Wednesday morning’s news flow is ambiguous for the Russian stock market. On the one hand, a decline in oil futures will likely put pressure on O&G names and the market as a whole. On the other hand, a spike in US index futures and an uptrend on Asian exchanges could lend powerful support to the Russian market. As for important economic data, we’d like to highlight US new homes sales and the mid-week inventory report due out today.

Daily Review. 24th March, 2009

Domestic stocks extended gains Monday on surging oil prices and bullishness on global stock exchanges, as the RTS Index climbed 5.78% and the MICEX Index rallied 7.29%.O&G names outperformed the market on rising oil prices, as Gazprom added a hefty 8.8%, Rosneft jumped 7.1% and Lukoil gained 6.3%. Banking stocks led the advancers on the heels of details disclosed by the US Treasury Department to rid the national banking system of toxic assets, with VTB surging 10.2% and Sberbank leaping 11%. Steels slightly lagged behind, as MMK edged up 0.2%, NLMK grew 1.5% and Severstal surged 4.2%.American equity benchmarks locked in impressive gains Monday, as the S&P 500 Index rallied over 7%. Investors were inspired by details of the new rescue plan that calls for public-private investments up to USD 1 tn. Asian indices are heading north on this news. A rally on equity markets contributed to upside on crude markets, with Brent contracts topping USD 53 a barrel. We think Tuesday morning’s news flow is again upbeat for the Russian stock market. Domestic banking stocks will likely continue to enjoy hefty demand against the backdrop of growing market caps of international financial corporations and O&G plays thanks to a rebound in oil futures. MMK’s FY 2008 financials, due out today, will be an important driver for the metal maker.

Daily Review. 23rd March, 2009

Russian trading was volatile Friday on heavy external negativity, but domestic indices managed to finish the session in positive territory, with the RTS Index inching up 0.32%, but failing to hold above the 700 mark, and the MICEX Index adding 0.91%. O&G plays outperformed, except for Rosneft (down 0.4%), as Gazprom advanced 1.4% and Lukoil closed out 1.5% higher. After several bull sessions Sberbank slumped 4.8%, while VTB, on the contrary, rallied a hefty 7.7%. Demand for steels was erratic, as MMK edged up 0.2%, NLMK rocketed 11.9% and Severstal spiked 5.5%. US trading was dominated by the bears on Friday, with the S&P 500 Index tumbling 2%. Some negativity came from investors’ expectations that GE’s financials would soften. Asian benchmarks are heading north this morning on growing confidence that actions taken by various governments to restore global economies will be a success. A higher yen became another additional positive for the Japanese market. Crude futures continued to rise on a weakening dollar, with Brent contract coming close to USD 52/bbl. We believe Monday morning’s news flow is upbeat for the Russian stock market. With surging oil prices, O&G names stand a chance to lead the advancers, while a spike in the market caps of international financial institutions could drive investor demand for domestic banking stocks. As for important economic data, we’d like to highlight US secondary home sales due out today.

Daily Review. 20th March, 2009

Domestic equity benchmarks headed north Thursday as crude futures rallied above USD 50/bbl and the ruble continued to firm against the dollar, with the RTS Index advancing 6.8% and the MICEX Index gaining 5.6%. Sberbank once again topped the advancers, leaping a whopping 17.5% with huge volumes of stocks changing hands. VTB, No. 2 lender, performed in line with the overall market trends (+6.6%). Despite a powerful spike in oil prices, O&G plays, except for Rosneft (+7.4%), lagged behind, as Lukoil grew 4.1% and Gazprom added 3.2%. Polyus Gold soared nearly 9%, locking in gains on a continuing uptrend in gold prices that jumped above USD 950/oz. Amid shaky global demand for base commodities steels again underperformed, with NLMK ending 4.3% higher, Severstal edging up 0.6% and MMK climbing 5.7%. US equity benchmarks corrected down Thursday after seeing hefty gains in the past two sessions, with the S&P 500 Index losing slightly more than 1%, with the steepest losses seen in financials. Moderate downbeat trends are unfolding on Asian markets this morning. Yesterday commodity markets were extremely bullish, with Brent and WTI futures rising above USD 50 per barrel, while gold and most industrial metals also took moves to the upside. According to our estimates, Friday morning’s news flow is neutral for the Russian market. We expect trading to be low-key today, not ruling out, however, a local correction on the market after Thursday’s rally. Surging oil prices could lend support to O&G names. A strengthening ruble sharpens the investment appeal of issuers that target domestic demand, among which we highlight MTS and Wimm-Bill-Dann. A pullback in financials on international trading floors could also put pressure on domestic banking stocks. However, we do not rule out abnormally strong demand for Sberbank securities.

Daily Review. 19th March, 2009

Upbeat trends prevailed on the Russian equity market in the first half of the session Wednesday, but a retreat in oil futures and weaknesses on European trading floors triggered a correction in Russian indices, with the RTS Index falling 2.3% and the MICEX Index sliding 3.8%. Sberbank (up 1.1%) was one of the few blue chips that closed out the day in positive territory, with volumes reaching record levels. VTB lagged behind, sinking 6.2%. Under pressure from decreasing crude contracts O&G names were among the day’s steepest decliners, with Lukoil giving up 6.2%, Gazprom tumbling 4.3% and Rosneft plunging 7.2%. Steels moved south in line with the overall market trends, as Norilsk Nickel dropped 2.5%, MMK eased 1.5%, Severstal dove 4.9% and NLMK dipped 1.1%. US equity benchmarks turned bullish Wednesday after the Fed’s decision to buy up to USD 300 bn of government debt. The S&P 500 Index added around 2%, with financials locking in the strongest gains. Trading is largely mixed on Asian exchanges this morning, while commodity markets reacted positively to the Fed’s decisions, as WTI futures jumped to USD 50/bbl and gold spiked to USD 930/oz. Thursday morning’s news flow is upbeat for the Russian stock market and we expect all blue chips to kick off to the upside at the open. Financials and gold miners could see heavy demand.

Daily Review. 18th March, 2009

Trading was moderately bullish Tuesday amid external upbeat news flows, with the RTS Index advancing 2.8% and the MICEX Index gaining 1.3%.Sberbank stood out as the day’s frontrunner, shooting up over 10% with volumes equaling around 5% of its market cap. Despite reports about possible changes in accounting procedures VTB slightly outperformed the market, ending 1.1% higher. O&G plays, despite a rebound in crude prices, turned in mixed performances, with Gazprom losing 2.2%, Rosneft surging 2% and Lukoil tumbling 1.7%. Novatek achieved an 8.7% gain ahead of the publication of its FY 2008 financials. Steels remained on the sidelines yesterday, as Norilsk Nickel edged up 0.4%, Severstal ended flat, MMK increased 2.6% and Norilsk Nickel eased 0.1%. Bullish sentiment prevailed on American exchanges Tuesday, fed by unexpectedly stronger-than-expected new home sales in February. The S&P 500 Index added more than 3%, with financials emerging among the top advancers. Moderately upbeat trends are seen on Asian markets this morning, with optimism buoyed by plans of the Bank of Japan to stimulate economic growth by buying more government bonds. Non-ferrous metals underwent no tangible changes on commodity markets. Jumping above the USD 50/bbl mark, WTI contracts stabilized slightly below this mark. Extension of the bullish trend is likely on the Russian equity market this morning. O&G names stand a good chance to outperform. Sberbank left VTB far behind yesterday and the latter could win back some lost turf. All eyes will be on US CPI February data today. After the Russian market closes, the Fed will release its interest rate decision, and market players expect the authority to leave the rate unchanged.

Daily Review. 17th March, 2009

Kicking off on a neutral note Monday domestic benchmarks headed north, with the MICEX Index gaining 1.8%, while the RTS Index edged down 0.8% on sharp appreciation of the greenback. Financials topped the list of advancers amid growing investor optimism about the prospects of the global economy, as Sberbank shot up 8.3% and VTB surged 5.5%. Metal names also posted gains in anticipation of stronger demand, with Norilsk Nickel leaping 7%, NLMK jumping 4.6%, MMK leaping 4.9% and Severstal ending 4.2% higher. Predictably, O&G plays underperformed the market on a retreat in oil futures after the OPEC meeting, as Gazprom rose 1.1%, Lukoil dropped 1% and Rosneft advanced 2%. US benchmarks ended the session marginally in the red Monday after volatile trading. Asian indices are moving ahead led by commodity and banking stocks. Commodity markets turned bullish in the second half of the session, as nearly all industrial metals took a jump and Brent contracts headed back to USD 46 per barrel. We think Tuesday morning’s news flow is largely upbeat for the Russian equity market. A rebound in oil futures should shore up O&G plays that lagged slightly behind the market Monday. Currently, market players believe new signals of the global economy’s recovery will appear soon, which should drive demand for steels and financials. In the second half of the session all eyes will be on new home sales and PPI data out of the US.

Daily Review. 16th March, 2009

The powerful rally extended on domestic exchanges Friday amid bullishness on commodity trading floors and a strengthening ruble, with the RTS Index advancing 5.4% and the MICEX Index jumping 2.9%. Amid surging oil prices O&G plays led the gainers, with Lukoil climbing 5.4%, Gazprom jumping 3.9% and Rosneft rallying 6.2%. Hefty gains were also seen in MTS, up 4.5%. On the metals front, steel makers slightly underperformed the market, as Norilsk Nickel edged up 0.9%, MMK grew 0.6%, NLMK was up 0.3% and Severstal advanced 1.3%. After solid gains earlier in the week bank stocks looked a bit weaker than the market, with Sberbank rising 1.3% and VTB ending flat. Last Friday American indices saw moderate gains (around 1%), and specific financials outperformed the market. Bullish trends gained momentum on Asian exchanges this morning in anticipation of a G20 meeting to address issues how to overcome the financial crisis. Industrial metals underwent marginal changes on commodity markets. After OPEC decided to hold oil output steady, Brent contracts fell to USD 44 a barrel. We believe Monday morning’s news flow is largely neutral for the Russian market. Provided oil futures move along a downward track, corrective moves cannot be ruled out after hefty gains last week. O&G names will be under the heaviest pressure today. As for mid-term market trends, we think the liquidity factor remains crucial and blue chips will enjoy the strongest demand as before.

Daily Review. 13th March, 2009

Domestic indices kicked off to the downside Thursday on external negativity, but the benchmarks clawed back losses in the second half of the day on a rebound in crude prices and stronger-than-expected retail sales in the US, ending with moderate losses, as the RTS Index dropped 1.38% and the MICEX Index eased 1.45%. By the final bell, O&G plays gained support from an rising oil prices, with Gazprom advancing 2.7%, Rosneft slipping 0.3% and Lukoil dipping 1.1%. Domestic bank stocks posted losses on a weakening ruble, as VTB fell 1.9% and Sberbank gave up 2.7%. Steel issuers moved south in line with the overall bearish trend, with MMK sliding 1.8%, NLMK ending flat and Severstal tumbling 3.3%. Gold miners looked stronger than the market on rising gold prices, as Polyus Gold edged up 0.1% and Polymetal added 0.4%. US indices gained an average 4% Thursday. Optimism stemmed from better-than-expected retail sales and optimistic earnings numbers from Bank of America in January-February 2009. Asian benchmarks are heading north this morning on reports Japan and China bumped up resources to support their economies. Crude oil prices took a sharp jump on expectations of market players that OPEC could decide to cut oil output at a March 15 meeting. At present, Brent contracts are trading close to USD 45 a barrel. We believe Friday morning’s news flow looks upbeat for the Russian stock market. A spike in the market caps of global financial corporations will likely bolster demand for domestic bank stocks. Surging oil prices could push oil and gas plays to the top of the list of advancers. Retail sales data from the EC, due out at 1 pm Moscow time, could influence investor sentiment.

Daily Review. 12th March, 2009

Domestic equity benchmarks drifted lower Wednesday, correcting down after several days of gains and also under pressure from sliding oil prices. As a result, the RTS Index gave up 1.15% and the MICEX Index shed 1.5%.The list of decliners included O&G plays, except for Gazprom (up 1.2%), on retreating crude contracts, with Rosneft plunging 3.3% and Lukoil pulling back 2.9%. Domestic bank stocks enjoyed strong demand on the heels of upside in global financial corporations, as VTB added 1.9% and Sberbank edged up 0.5%. Steel-making issuers turned in mixed performances, with MMK inching up 0.2%, NLMK sliding 3.2% and Severstal pulling back 5.3%. Norilsk Nickel took a 6.1% dive as the metal giant decided to sell its treasury stocks below market price. American indices ended Wednesday in the black, but only with fractional gains. Support came from statements by JP Morgan Chase officials that the first two months of 2009 proved to be profitable for the bank and Citigroup. This news fueled investor hopes the banking crisis would come to a close soon. Asia’s equity benchmarks are mainly bearish this morning. Builds in US oil inventories outstripped the consensus forecast, putting more pressure on oil prices. WTI contracts are trading around USD 43/bbl this morning. We view Thursday morning’s news flow as largely downbeat for the Russian stock market. Falling oil futures will likely continue to exert pressure on the oil patch. With gold futures advancing, gold miners could outperform today. As for global economic data capable of changing trading patterns, we’d like to highlight US retail sales, due out at 3.30 pm Moscow time today.

Daily Review. 11th March, 2009

Domestic indices powered ahead Tuesday on the back of surging oil prices, a strengthening ruble and bullish performances on global stock exchanges, as the RTS Index spiked 10.15% and the MICEX Index shot up 8.90%. A surge in crude futures helped O&G plays top the list of advancers, with Gazprom leaping 10.3%, Rosneft climbing 15% and Lukoil jumping 10.4%. VTB stocks, rocketing 16.3%, staged another show of strength, while Sberbank achieved a 7.9% gain. Steel issuers posted advances in line with the overall market trend, as MMK added 6.1%, NLMK soared 11.3% and Severstal ended 6.8% higher. With gold futures falling, gold miners underperformed the market, with Polyus Gold sliding 2.3% and Polymetal tumbling 1.6%. UralKaly added 24.7% to its market cap on favorable corporate news about the amount of the fine imposed due to an accident at its Berezniki mine. American benchmarks exhibited impressive gains Tuesday, with the S&P 500 Index jumping as much as 6.4%. Optimism stemmed from statements by a Citigroup official that January-March 2009 was the best quarter for the lender since 2007. During the first two months of 2009 Citigroup managed to report a profit. Asian indices are also heading north on this news, with financials leading the pack. After a rally oil contracts took a drop, reflecting investor worries about high US oil inventories, with the mid-week inventory report due out today. According to our estimates, Wednesday morning’s news flow is upbeat for the Russian stock market. However, after several bullish days there’s a stronger likelihood that some market players could resort to profit taking. A spike in the market caps of international financial institutions could be an important upside driver for domestic bank names. With oil contracts falling, O&G plays could slightly underperform. An important factor for Severstal today will be the release of its FY 2008 IFRS financial statement. The US mid-week inventory report is due out at 6.30 pm Moscow time today, which could exert a substantial impact on crude oil futures.

Daily Review. 10th March, 2009

Notwithstanding external negativity domestic equity benchmarks locked in solid gains Friday on the heels of rallying crude prices, with the RTS Index leaping 3.09% and the MICEX Index advancing 2.52%. O&G plays outperformed, except for Gazprom (up a mere 0.6%), with Rosneft surging 4.2%, Lukoil jumping 2.7% and Surgutneftegaz soaring 6.3%. VTB stood out among financials, climbing 3.3% on news about potential SPO parameters, while Sberbank added 1%. Steel makers also moved along an upward track, although lagging slightly, as MMK was up 2.1%, NLMK grew 2.6% and Severstal edged up 0.4%. On Monday US stocks took a drop, with the key benchmarks giving up over 1%. Some negativity came from Warren Buffet’s CNBN interview during which he expressed worries about a deepening recession of the American economy and growing inflation. The World Bank also released disappointing forecasts, projecting global GDP to drop in 2009. Asian exchanges are mostly bullish this morning. Statements by OPEC officials that the oil cartel’s March 15 meeting will tackle the issue of lowering oil production quota triggered a spike in oil futures, with WTI contracts trading above USD 47/bbl. We believe Tuesday morning’s news flow is mixed for the Russian stock market. A downtrend in American indices will likely put pressure on domestic benchmarks. However, on Friday domestic liquid names showed strong resistance to external negativity. With oil prices on the rise, the benchmakrs could extend gains today. Consequently, with O&G issuers set to outperform.

Daily Review. 6th March, 2009

Russian stock indices kicked off in the black Thursday on external bullishness, but in the second half of the session the benchmarks came under pressure from weaknesses on European exchanges and a retreat in oil prices. As a result, the RTS Index edged down 0.67% and the MICEX Index tumbled 2%. O&G stocks headed south amid falling oil prices, with Gazprom shedding 2.2%, Rosneft plunging 4.5% and Lukoil easing 1%. Sberbank sank 4.5%, while VTB ended flat on favorable corporate news. Steel makers ended on a mixed note, as MMK dropped 2.4%, NLMK added 1.5% and Severstal fell 2.9%. Polyus Gold advanced 2.6% gain on rising gold futures. Heavy sell-offs hit US equities Thursday, with the key indexes diving more than 4% as investors fretted that there is no sign of an end to the global economic recession. Major negativity also came from statements by GM’s auditor that the auto giant could fail to avoid bankruptcy. Asian exchanges are moderately bearish this morning, with commodity stocks largely leading the decliners. A strengthening yen became an additional negative factor for the Japanese market. Oil contracts are retreating on the heels of downtrends in global stock markets, with Brent trading slightly above USD 44 a barrel. Impressive gains on the metals market were seen in gold prices. We view Friday morning’s news flow as downbeat for the Russian stock market. Amid falling commodity prices O&G and metal issuers will likely be under the heaviest pressure today. Gold miners could be defensive instruments today, with support coming from rising gold futures. VTB stands a good chance to marginally outperform the market on the back of favorable corporate news (SPO details). The US Labor Department is to release numbers at 4.30 pm Moscow time today, which could spell more doom and gloom for US and global equities.

Daily Review. 5th March, 2009

Domestic stock indices locked in hefty gains Wednesday amid bullishness on global stock and commodity markets, with the RTS Index surging 4.1% and the MICEX Index rallying 4.8%. Stocks of state-controlled banks outperformed the market for the second session in a row, with Sberbank shooting up 9% and VTB leaping 7%. Sberbank also led the way in terms of trade volumes on MICEX (nearly 3% of its capitalization). O&G plays predictably outperformed the market on the heels of steadily growing oil futures, as Lukoil jumped 5.7%, Rosneft added 4.9%, Gazprom climbed 2.9% and Surgutneftegaz rocketed 9.2%. Solid upside was also seen in metal issuers, with Norilsk Nickel increasing 6%, Severstal taking a 5.6% jump, NLMK ending 5.3% higher and MMK gaining 4.3%. American indices powered ahead Wednesday, winning back some losses sustained earlier in the week. The S&P 500 Index grew 2.5% and commodity plays led the advancers. Notwithstanding bullish trends on the market bank stocks posted further losses. Upbeat sentiment prevails on Asian markets despite China’s ambitious plan to maintain fast economic growth rates this year. Yesterday commodity markets saw gains on expectations demand from the Chinese economy (the largest in Asia) would expand. Also industrial metals gained in value, while Brent futures rose to USD 46 a barrel.We believe Thursday morning’s news flow is conducive to buying on the Russian equity market and Wednesday’s rally stands a good chance to continue at least at the open. O&G and metal issuers could continue to lock in gains on the heels of a rally in the commodity sector. During two consecutive sessions state-run bank stocks outperformed, but external negativity will continue to exert the heaviest pressure on the financial sector in the mid term. ECB and the Bank of England are to adopt rate decisions today and investors expect both regulators to lower the rates by 0.5%.

Daily Review. 4th March, 2009

After seeing mild losses at the open domestic indices turned north Tuesday on the heels of surging energy prices, with the RTS Index edging up 0.3% and the MICEX Index gaining 1.1%. Quite unexpectedly, state-run bank stocks emerged as the lead advancers, as Sberbank jumped 4.9% and VTB climbed 2.6%. O&G plays, except Gazprom (-0.5%), powered ahead on rising oil futures, with Lukoil growing 1%, Rosneft jumping 3.6% and Surgutneftegaz advancing 3.8%. By the final bell steel issuers ended on a mixed note, with MMK leaping 2.9%, NLMK losing 1.4% and Severstal inching up 0.2%. Polyus Gold was among the decliners, off 6.6% on the back of retreating gold futures and a shifty corporate news flows. Meanwhile, US exchanges closed out the session in negative territory Tuesday on volatile trading, as the S&P 500 Index fell 0.5%. Yesterday, US Fed chairman pointed out that the national financial system is still far from stabilization. Meanwhile, upbeat sentiment prevails on Asian trading floors this morning on expectations the government’s stimulus measures in China would yield quick results. After statements by Chinese officials that the economy would begin to recover as early as this year, energy prices started climbing. Gains were recorded virtually in all industrial metals and Brent contracts rose to USD 43.50/bbl. We believe Wednesday morning’s news flow is upbeat for the Russian equity market and investors could see upside at the open. If local bullishness remains on commodity markets, commodity stocks will likely end the session among the top gainers. Stocks of state-owned lending institutions that unexpectedly locked in gains the day before, as we think, are attractive on fundamentals, although investors will remain wary about financials in the near future.