Russia's RTS Index futures - liquid tradable instrument.

This is a discussion on Russia's RTS Index futures - liquid tradable instrument. within the Indices forums, part of the Markets category; Good morning! A bit hard to write a morning comment – literally – amid acrid smoke from forest and peat-bog ...

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Old Aug 9, 2010, 8:02am   #43
 
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Morning Comment - 09.08.2010.

china white started this thread Good morning! A bit hard to write a morning comment – literally – amid acrid smoke from forest and peat-bog fires east of Moscow. Just one quick observation in this shroud of smoke:

S&P’s price action into the close on Friday was quite supportive of our bullish stance. These -10/+10 days on S&P normally say a thing or two about the market direction. US tanking 10 points or so in the early going due to a slab of what is perceived to be bad news, and then regaining ground into the close, is a sort of set-up where I, for one, would hate to be short

It will be a quiet week by all means – and in Moscow – painfully hot. Good trading to you.
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Old Aug 10, 2010, 7:38am   #44
 
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Morning Comment - 10.08.2010.

china white started this thread Good morning! As Bolsheviks used to comment on the defeats of the Russian Army in WWI – “The worse, the better”. What they obviously meant was that the weaker the Tsar was, the better were their chances to grab power.

Yesterday’s market flavour was not much different from that Bolshevik logic There is plenty of speculation round that weaker jobs growth in the U.S. will prompt the Fed today to extend efforts to shore up US economy. The worse, the better

What I liked loads yesterday was Europe’s largest publicly traded fund management company, Schroders Plc, rallying back to the tops of May. Main thing here is that net inflows from investors jumped ahead of the expectations – and this is perhaps the “purest” gauge of “intrinsic” liquidity in the market.

RUSSIA: We maintain our HOLD recommendation on Seventh Continent (SCON RU). Yesterday Seventh Continent disclosed its July retail sales, which showed a 5% y-o-y increase in ruble-based revenue (on gross basis) and 4% y-o-y growth in 7M10 gross revenue in ruble terms. Seventh Continent’s shares are now trading with almost a 40% discount to Magnit and X5 Retail Group on the basis of 2010E EV/EBITDA, which may be explained by the relatively slow growth pace of the company’s fundamentals. Its management has previously guided the market that this year it will open 3 hypermarkets (in Vologda, Obninsk, Reutov) and 11 supermarkets (in Moscow and Moscow region), and close 3 supermarkets (last year retailer opened 5 stores including 2 hypermarkets, and closed 3 stores). Taking into account that since the year beginning Seventh Continent has managed to open only 3 new stores, we see such plans to be overly optimistic. We maintain our HOLD recommendation on the stock with end-2010 target price of $9.6 per share.

Good trading to you!
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Old Aug 11, 2010, 7:38am   #45
 
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Morning Comment - 11.08.2010.

china white started this thread Good morning! Thanks to Lord Almighty Moscow heat has subdued a bit, there is hardly any smog in the air and we can all breathe now – well sort of ! Looks like that Russian equity market will follow thermometers to the south in the short term, but we DO HOPE to see a huge divergence in the nearest future – and here is why.

There is a tug-of-war left unfolding in the market after Fed yesterday:

· Fed’s re-investment of principal payments on their mortgage holdings into long-term Treasuries has all but ONE consequence – REDUCTION OF BORROWING COSTS throughout the economy, and this additional liquidity is mega-encouraging.

· Yes, Fed’s intention is to show markets that their foot is firmly on the accelerator. However, the mere fact that they had to start letting the dog out – well it is their attempt to bolster growth IN MORE THAN A YEAR (!!!) makes one wonder if economic recovery is likely to be even more modest than the sort of modesty bulls would be comfortable with

I still do firmly believe that bears will be washed-out by this wake of liquidity. But this rose may have more thorns in it than bulls might expect short-term. In short, BUMPY RIDE into the Fall.


Negative opening on Russian and European bourses will be no surprise after Fed’s wording on recovery’s modesty ; add to that disappointing Japanese machinery orders data, China’s industrial output figures and sliding commodities that are just adding pressure on EMs. Note, that SPX index still holds steady in lying position on the 200-day MA, while Russian RTS has some 2,5% space to fall to it’s 200-day MA.

COMMODITIES: we call cutting long exposure in base metals. On the 20th of July we advised to take long exposure in nickel. Although investment horizon was initially estimated as 6 months, we call taking profit (some ~20%) now. Since the idea has been aired out, LN1 grew by 20,75% on LME, while nickel’s ETF (NICK LN Equity) grew by 21,9%.

RUSSIA: Car and LCV sales added 48% y-o-y in July. Sollers (SVAV RU) is the best one across the Russian car makers’ board in 7M10 (also see attached). Domestic producers in Russia (excluding IzhAuto) outperformed the whole car and LCV market recovery over 7M10. Thus, Sollers vehicle sales advanced 34% y-o-y to 39,081 units mostly due to strong demand for UAZ models (y-o-y increase of 45%). AVTOVAZ (AVAZA RU) boosted its car sales by 28% y-o-y to 272,599 units. The biggest Russian auto maker should recognize the impact of state cash for clunkers program, through which the company realized 34% of its vehicles over 7M10. GAZ Group’s (GAZA RU) results seem less successful – the company’s vehicle sales increased only by 12% y-o-y vs. the whole market growth of 9% y-o-y in January-July, 2010.


Good after-Fed trading to you
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Old Aug 12, 2010, 10:30am   #46
 
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Morning Comment - 12.08.201

china white started this thread Good morning London, good afternoon Moscow My apologies for a late morning comment – flying Aeroflot has its joys and its perils

I’ll be brief here. Yesterday’s trading sessions across the globe had all one common motto - ‘LOSS OF CONFIDENSE IN THE ECONOMIC RECOVERY’. What has changed in the world? – NOTHING. Pessimism – as high as it was, we commented on that before – jumped even higher. And that going hand-in-hand with 1) lots of cheap money in the market; 2) companies coming out good results, okay not spectacular across the board, but definitely above an “average” earnings season (some results from Russian companies below are quite in line with this notion); and 3) central bankers sworn on their willingness to support markets.

I am not going to be a darling in the eyes of many saying this today – but can hardly think of a better set-up for market – bubbling up again. In the meantime – I will have to repeat myself – BUMPY RIDE through thin summer markets. I can’t see anything apocalyptic in 30 points sliced off S&P yesterday.

RUSSIA:
- Raspadskaya (RASP RU) may start production at its main site as soon as October 2010. Now Mr Putin and Mr Tuleev (the Governor o Kemerovo region) are discussing how to speed up the approval process in Novokuznetsk to resume “partial” mining. That is driving up the stock. The deposit will start working at full capacity in 2011-2012 (as expected). Attention from the government to the company is a POSITIVE fact;

- Wimm-Bill Dann (WBDF RU) will BUY 18,4% of its shares from Danone; expected; POSITIVE; the price is $470mn; this implies $58.1 per share or 19% premium to the local shares prices;

- FESCO (FESH RU) showed considerable improvement of operating results in 1H10. POSITIVE;

- KAMAZ' (KMAZ RU) profitability improved in 2Q10 due to truck sales recovery. POSITIVE;

- Cherkizovo Group (CHE LI) reported 1H10 operating results. POSITIVE

Yesterday's trading activity was subdued in blue chips as most of clients took their long bets off in previous days and do not go short at the moment. Yet, we saw some sellers - several domestic accounts - were cutting their long exposure in ROSN, GAZP closing long call options; we had also sellers in Nickel (commodity) calls; at the same time specific value stories are in good demand – such utility names as TGKG, KRSG, TGKM, IRGZ, KZBE, MRKK, TGKF are well bid across the board and we keep on having them in our buy lists for many days, having already bought quite a bit; the seller goes on in OGKA, VRAO, TATNp, NNSI, URSIp, NVTK; international accounts tend to take risk in many illiquid issues though such as BRZL, AMMO, LSNG, Germany listed Ukrainian GDRs; have demand for such forgotten names as BTSTp.

Good Trading to you!
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Old Aug 16, 2010, 8:14am   #47
 
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Morning Comment - 16.08.2010.

china white started this thread Good morning! Common logic would perhaps tell one the following this morning - Asian shares falling, why? because data showed Japan's economic growth stalled in the second quarter, meaning what? adding to worries that a global recovery is quickly faltering. Natural conclusion to that is investors rushing to sell riskier assets.

Meaning one should expect a steep slide in the mother of all riskier assets - EM equities.

This may well be the case on a day-to-week time spans, but my take here is that IF that slide indeed happens, it will just serve you with a "wicked" long entry point on a plate . I am speaking to a lot of people mulling increasing the size of their EM equity portfolios and I can definitely say that both "selective" (!!) risk appetite and money to feed that appetite are firmly there. That "selective" risk appetite somehow - and I recall first half of 2003 in this set-up - goes hand-in-hand with an extreme level of pessimism GENERALLY.

We all know how this set-up unfolded into 2nd half of 2003 and onwards

RUSSIA:

- Bank Vozrozhdenie (VZRZ): 2Q10 IFRS results preview. NEUTRAL;

- Lukoil (LKOH) released 1H10 production statistics, updated on debt raising. NEUTRAL;

- Novatek's (NVTK) 2Q10 IFRS results - in line with consensus. NEUTRAL;

- Buryatzoloto (BRZL): strong financial performance in 1H10. POSITIVE High gold prices, production growth and ruble depreciation helped the company to increase net income in 2Q10 by 44% q-o-q. We positively view the published numbers and consider the shares of Buryatzoloto as one of the most attractive among gold mining companies on the world market;

- Ulan-Ude Aviation Plant (UUAZ) and Kazan Helicopters (KHEL) posted strong 2Q10. POSITIVE;

- MSZ (MASZ) and NCCP (NZHK) released weak 2Q10 financials. NEGATIVE;

- We put MSZ and NCCP under review. Thereby, the whole 1H10 companies' financials provide downside risks for our full year forecasts, to less extent for MSZ and to larger extent for NCCP. We put both companies under review and plan to release updated forecasts soon. Our current end-2010 target prices for MSZ and NCCP amounted to $325/share and $11/share, respectively. At the same time, we note that both MSZ and NCCP trade with a 50-70% discount to foreign peers on a basis of 2011E P/E of 4.4 and 6.5, respectively;

- MRSK Holding (MRKH): inclusion into MSCI Index is under question. NEUTRAL MRSK Holding is a potential candidate for inclusion into the MSCI Index. MSCI Barra will publish the results of the quarterly index review this week. According to our estimates, one of the most likely candidates for inclusion into the MSCI index is MRSK Holding. Despite the fact that the holding meets all the requirements for full capitalization (minimum is $ 2.9 bn, in a case of MRSK Holding - $6 bn) and for free-float adjusted market capitalization (minimum is $1.5 bn, in the case of the MRSK Holding - $2.1 bn), we expect that MRSK Holding will not be included into the index this time, because in addition to the requirements for capitalization the company has to have the 12-month annual traded value ratio, which is the ratio of the average turnover to free float for 12 months, not less than 50%, whereas according to our estimates in the case of MRSK Holding this ratio is about 40%. In our calculations we assumed that the company's free-float is 35%. The premium may decline. At present time, MRSK Holding's shares are traded with a premium to the sum of its parts exceeding 20%. In our view, in the case of a negative decision on the inclusion of the company's shares into MSCI index, the premium is likely to decline significantly;

- We have revised our Raspadskaya's (RASP RU, BUY) fair price due to recent positive officials' statements concerning restoration works on the key coal mine. They are in line with our expectations and lead us to increase our company's operating and financial forecasts. As a result, we have raised our fair price by 12% to $8.5 per share and maintained our BUY recommendation.


TRADING ACTIVITY:

After volatile swings in previous days, market took a break on Friday. Despite weakening crude oil, weaker ruble - Russian blue chips spent most of the day in a rather narrow band. We had sellers in GAZP, TRNFP; had good trading activity in utilities sector, especially in TGKF, TGKE, TGKI, OGKA; saw support in HYDR, MRKH; in telecoms we had size trades in RTKMp, seller goes on in NNSI, NNSIp.

Good week ahead to you!
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File Type: pdf VZRZ_tkbc_13_08_10_eng.pdf (80.8 KB, 68 views)
File Type: pdf Equity_Daily_tkbc_16_08_10_eng.pdf (329.8 KB, 100 views)
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Old Aug 16, 2010, 9:23am   #48
 
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CORRECTION: Morning Comment - 16.08.2010.

china white started this thread Pls accept my apologies for the typo in my last post – I obviously meant 2004, not 2003 in my comparisons. Respective sentences should read:

" That “selective” risk appetite somehow – and I recall first half of 2004 in this set-up – goes hand-in-hand with an extreme level of pessimism GENERALLY.
We all know how this set-up unfolded into 2nd half of 2004 and onwards "
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Old Aug 17, 2010, 7:48am   #49
 
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Morning Comment - 17.08.2010.

china white started this thread Good morning! Boring summer-thin markets by all means. Probably a good point to step back and reflect on the fact that we are trying to recovery from the longest and deepest recession since the 1930s! Not only that but also from the sort of % swings from heaven to hell (2000-03 and 2008-09) matched again only by the Great Depression! And for that matter, we are doing quite well in this bumpy recovery!

RUSSIA:
- Sberbank (SBER) RAS numbers over 7M10 - achieving the targets. NEUTRAL We keep our BUY recommendation for Sberbank shares;

- Lukoil (LKOH) purchases its 7.6% stake from ConocoPhillips. POSITIVE Lukoil buys 64,638,729 its shares from ConocoPhillips;

- Novatek (NVTK) launches new infrastructure at Yurkharovskoye. NEUTRAL Yesterday Novatek announced that it completed and launched an unstable gas condensate de-ethanization unit at its Yurkharovskoye field and a 326 km unstable gas condensate pipeline connecting the field with Novatek's Purovsky gas condensate processing plant. The new unit and pipeline will allow Novatek to de-ethanize and transport up to 3 mn tn of unstable gas condensate p.a. This will enable Novatek to eliminate the risks and costs associated with using third-party infrastructure and services and, thus, is generally positive news;

- MRSK of Siberia (MRKS) and MRSK of South (MRKY) posted 1H10 RAS financials. NEUTRAL We consider the results of MRSKs' as neutral and expect significant improvement in performance of companies following the transition to RAB-regulation;

- AVTOVAZ (AVAZ) posted good 2Q10 RAS financials as expected. NEUTRAL Car maker released quarterly net income for the first time since 3Q08 mostly due cash-for-clunkers strong sales;

- Rostvertol (RTVL) received net loss in 2Q10. NEGATIVE We put under review our recommendation for Rostvertol. The whole company's financial results for 1H10 showed positive y-o-y dynamic. Rostvertol's revenue advanced by 78% y-o-y to $119 mn, operating income - by 61% y-o-y to $16.3 mn, net income - by 23% y-o-y to $3.3 mn. Such improvements happen mostly due to strong 1Q10. We put under review our recommendation for Rostvertol (our end-2010 target price was $0.03/share). Currently the helicopter producer trades with a 36% discount to foreign peers on a basis of 2011E P/E of 7.4;

- Bamtonnelstroy (BTST) published weak 1H10 results. NEGATIVE Profit decreased due to construction works reduction and long construction periods.

TRADING ACTIVITY:
Yesterday we had a bit more active day with more sellers around. Domestic accounts were better sellers in chips since the very opening driven by negative sentiment of the overseas markets; in utilities activity was subdued - we had local clients selling KZBE (foreign account bought), VRAO, while foreigners were selling OGKE; have crossed some VSMZ (foreign account bought); close to the bell we were selling TNBP and BRZL (despite strong earnings release) for locals, at the same time we had buyers in BRZL's parent company HRG CN, that rallied by almost 12% yesterday in Toronto on very good 2Q results.

Do not get bored trading today!
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