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; Lads and lasses, Hiya, trust all is well. I would hate publishing same information twice as it is already published ...

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Old May 31, 2010, 11:13am   #1
 
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Russia's RTS Index futures - liquid tradable instrument.

Lads and lasses,

Hiya, trust all is well. I would hate publishing same information twice as it is already published in "Equities" Forum - however I reckon this is perhaps just as relevant to Index futures traders as to single stocks ones (if not more).

Anyway - you can find my original post under:

http://www.trade2win.com/boards/equi...rivatives.html

I will be very brief here. Me personally comes from S&P, Nasdag and FTSE futures and options trading background, my romance with Emerging Markets started flourishing only 5-6 years ago. I am currently heading up International Sales & Trading Desk at a Russia's state-owned bank called TransKredit Bank Capital - TKB Capital (www.tkbc.ru), I am sure you never heard of it Obviously I look at Russia's RTS Index futures and options traded at a St. Petersburg exchange called FORTS every minute of the day and would like to introduce you lot to this potentially interesting instrument here.

You can get a general idea of what RTS (standing for Russian Trading System) is like these days browsing their official site:

http://www.rts.ru/en/

For a definition of RTS Index - see:

http://www.rts.ru/en/index/rtsi/

and finally for a detailed definition and settlement rules of front-end JUN10 future on RTS Index pls refer to the following link:

http://www.rts.ru/en/forts/contract.html?isin=RTS-6.10

What most peoiple DO NOT realise are 2 main things:

1) RTS Index Front-End future is a HIGHLY liquid instriment. In my post in "Equities" Forum I compared last Friday's daily volumes for JUN10 FTSE and RTS Index futures. They stood at 7 and 2.3 bil quid respectively.

2) You can trade Russian broad index pretty much ONLY thru RTS Index fuutres. At many points people tried to create proxies for RTS Index tradable on Western Exchanges - most notable ones are RDX Index on Wiener Borse, RIOB Index on London's EDX and MSCI Russia Index (MXRU Index) in Germany. The latter is perhaps the best proxy you can find internationally - RTS Index has 50 components in it, RDX and RIOB 16 and 15 respectively, with MSCI Russia Index having 28 components. HOWEVER, PROBLEM WITH ALL THOSE PROXIES IS - THEY ARE HIGHLY ILLIQUID, partly because for a long time Russian players and market-makers had no access to those international proxies.


Pls refer to my original post in "Equities" Forum if you would like to open an account at my Cyprus subsidiary (KIT Finance Europe) to start trading RTS Index futures - the process is actually VERY straightforward. I am opening accounts there for both individuals and funds - it is quickly becoming a very popular way to get access to Russian exchanges.

Cyprus subsidiary is good for many things - 2 of them being: 1) it is fully guaranteed by TKB Capital which is in turn guaranteed by the Kremlin; 2) there is no taxation whatsoever on your single account in Cyprus, meaning that the Russian 13% tax is not applicable here since the subsidiary is governed by Cyprus law where tax is zero and there is a Double Non-Taxation Treaty between Russia and Cyprus. You make a mil trading RTS Index fut e.g. - you get a mil in your account

Let me know if this is of interest.

Cheers
CW
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Old Jun 1, 2010, 6:47pm   #2
 
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Re: Russia's RTS Index futures - liquid tradable instrument.

china white started this thread One more quick comment here o Russia's RTS broad Index.

It is a common mis-perception that trading Emerging Markets gives you a HIGHER BETA for an increased risk, essentially giving you extra leverage as compared to trading G7 Indices.

That may be the case, may be not. I am attaching 2 quick charts for the past 8 years comparing BETA of Russia's RTS Index to our good old FTSE100 (on a weekly basis so you have enough number of points). Even though you may think trading RTS gives you 1.12-ish BETA in local currencies (Russian Ruble and British Pounds), when you scale everything down to USD, you have BETA OF ONE!!!

Meaning if you realistically invest greenbacks, on a large scale of events you do equally well trading Russia's RTS Index or FTSE100. Lil difference though - you can trade RTS through your Cyprus accounts (see discussion above) and pay zero % income tax on your profits.

Now risks. Pls convince me that trading FTSE100 thru an English broker who may be private or essentially on the Gov't books (like RBS) is anywhere safer than trading through a Russian broker with the same FSA registration as the English one - but who is owned and guaranteed by the Kremlin

Bottom line is - BETA=1, pretty much the same counterparty risks. Difference is 40%+ tax bracket in the UK, 13% in Russia and next to zero % in Cyprus. Now ask me why I moved over to Emerging Markets

CW
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Old Jun 5, 2010, 8:01am   #3
 
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Looking back a bit.

china white started this thread Guys let me know if you'd like to see my morning comments here as well. They are obviously more intended for funds - however quite a few individual accounts find them very useful.

Hate publishing a weekold morning comment - but here it is, I think it is more than relevant now. It was published after a massive sell-off in the markets that happened on 25 May was reversed in the late going:


From: v.googlenko@tkbc.ru [mailto:v.googlenko@tkbc.ru]
Sent: Wednesday, May 26, 2010 11:05 AM
Subject: Pivotal point - Morning Commentary - 26.05.2010

Good morning, it's Vadim, trust all is well.

Back in my trading days on S&P a so-called -10/+10 day when index moves one way in its early trading hours and then closes flat was considered to be a short-term reversal. Yesterday we had a -35/+35 day! Additionally VIX touched high 40ies and started recoiling back, now firmly in the 30ies league. I would expect a VERY positive end to the week - where we will have a unique opportunity to go SHORT.

FTSE will most likely bounce back into 5100 territory, but knowing how old lady trades on breaking mega-levels of 5000 variety I expect yesterday's close to be re-tested next week. Again, 5200-5250 band (if it gets there) is likely to be a great SHORT opportunity.

Here in Russia, RTSI Index futures showed additional 20 pts backwardation yesterday which was still being whacked by smaller players - and that was not along the avenue of closing out of longs - as Interest would have been shrinking then - on the contrary, Interest was massively on the Up, meaning that fast fingers were whacking even the lowest printed levels. Those fingers are likely to sweat a bit into the end of the week in my opinion - given S&P's reversal last night.

My 2 cents Good trading to you!

End of that Morning Comment.


Now - what now? In my strong opinion, best the bulls can hope for is a technical pattern that many call “Adam & Eve” where a quick dip down will be followed by a broad double-bottom clearly resembling Eve’s fascinating parts

See quick chatrs attached. After last Friday's massacre S&P needs another 2.5% on the way south to re-test the low of 25 May. FTSE, thx to its earlier than US close on Friday is 4%-ish above that mark.

If FTSE overshoots sounthbound at Monday's open, this may be a fantastic long swing opportunity.

CW
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Old Jun 7, 2010, 7:27am   #4
 
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Morning Comment - 07.06.2010.

china white started this thread Quick morning comment. I vividly recall starting to hear about Hungary’s problems about 2 years ago – but then no one cared. These days round the skeleton is bang out of the closet! Now – monthly job report that failed to live up to its billing on Friday. Curious thing is that even though the unemployment rate went down more than expected, by levels that mattered to the market it was a disappointment - I am talking here about expectations that more than 500, 000 jobs would be added to U.S. payrolls. And those 2 things are blamed to pile up to bring all major indices to their knees into the Friday close.

From a macro perspective, BP disaster, European jitters, there seems to be plenty to worry about, but I am hearing quite a few lads and lasses out there, who look at the economic potential of companies, say that the risk-reward actually looks pretty good currently. One has to agree that for the most part, companies so far are providing very positive guidance for sales and profits for the balance of this year and going into 2011. That includes large cap technology firms with exposure to Europe saying they haven't seen any impact yet. For one, I will mention Cisco Systems Inc. CEO John Chambers here who is voicing the most optimism in years!!!

As we mentioned in our morning comment on the 26 May – see below – after S&P recorded a -35/+35 pts reversal the day before, “FTSE will most likely bounce back into 5100 territory, but knowing how old lady trades on breaking mega-levels of 5000 variety I expect yesterday's close to be re-tested next week. Again, 5200-5250 band (if it gets there) is likely to be a great SHORT opportunity”. This scenario has been playing out down to a T. We still believe that the lows of 25 May (4900ish on FTSE100) will be re-tested. Best the bulls can hope for is a technical pattern that many call “Adam & Eve” where a quick dip down is followed by a broad double-bottom clearly resembling Eve’s fascinating parts

LIQUIDITY WILL TELL YOU if it is indeed a double bottom in the making OR if we are in for a basement treat. Russian RTS Index JUN10 future (VEM0) just gapped down 4% at the open – hardly a glorious precursor.

RUSSIAN SINGLE STOCKS: On Friday we saw poor trading activity in most of stocks; in blue chips selling pressure prevailed though the market stood rather still in spite of bad sentiment almost till the closing bell. Stocks of gold producers PLZL, PMTL, retailers MGNT, FIVE LI were quite strong during the day; we saw nice support in LKOH. TNBP/p were well bid during the day with no sellers seen around. In utilities sector we didn’t see much of activity except local demand in IRGZ, TGKI, BEGY, careful bids in distribution companies, trades in OGKA, OGKB, OGKF. In metals & coal sector one could see big supply, local interests to buy EVR LI. We continue to see demand for airlines - AFLT, TMAT. Mid of the day will show the direction for the market. Good trading to you!


--------------------------------------------------------------------------------

Sent: Wednesday, May 26, 2010 11:05 AM
Subject: Pivotal point - Morning Commentary - 26.05.2010


Back in my trading days on S&P a so-called -10/+10 day when index moves one way in its early trading hours and then closes flat was considered to be a short-term reversal. Yesterday we had a -35/+35 day! Additionally VIX touched high 40ies and started recoiling back, now firmly in the 30ies league. I would expect a VERY positive end to the week - where we will have a unique opportunity to go SHORT.

FTSE will most likely bounce back into 5100 territory, but knowing how old lady trades on breaking mega-levels of 5000 variety I expect yesterday's close to be re-tested next week. Again, 5200-5250 band (if it gets there) is likely to be a great SHORT opportunity.

Here in Russia, RTSI Index futures showed additional 20 pts backwardation yesterday which was still being whacked by smaller players - and that was not along the avenue of closing out of longs - as Interest would have been shrinking then - on the contrary, Interest was massively on the Up, meaning that fast fingers were whacking even the lowest printed levels. Those fingers are likely to sweat a bit into the end of the week in my opinion - given S&P's reversal last night.

My 2 cents Good trading to you!
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Old Jun 8, 2010, 7:39am   #5
 
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Morning Comment - 08.06.2010.

china white started this thread I will be short here. Yesterday S&P, I am sure, was LOVED by intraday traders as it made them a quick buck swinging 15 pts in the last hour. Them lads do not care whether such swing is up or down , however we do So - why was the swing southbound?

Ok, let’s see the 2 buzzwords from yesterday’s action. 1) Manufacturing improved in Germany for a second month in April. Surprise, surprise – make Euro lose another 17% and German manufacturing will fly to the sky. 2) Hungarian officials toned down comments about a potential default that rattled investors. With all my respect to Hungary – if investors are rattled THAT much by the state of an economy of THAT caliber, well THAT is really scary. You’d hardly expect a 15 pts up swing in this environment in the late going.

I will entirely agree with Mr. Holland who mentioned that investors are currently fearful and reacting quickly to both negative and positive news – with a lot of noise in the market right now. Technically – as I was mentioning all along – eyes on FTSE behaviour round 5000 line in the sand.

Russian Single Stocks:

Yesterday following bad sentiment in Europe and US Russian stocks opened with a gap down and most of market participants were not active waiting for an additional trigger to trade. Only in the second half of the day the market saw a direction - again following US futures most of chips closed the gap. And here right before the closing we got nice selling orders in GAZP, LKOH, ROSN, SNGS/p. SBER & RTKM were outperforming the broader market. Some activity was still seen in telecoms - investors tend to hold exposure here till the reorganization. In small caps activity was low - had some buyers in BORG RU, IZHZ RU…in utilities - had local buyers in InrerRao, MRSK Holding, sellers in RusHydro, sellers in AFLT, sellers in Russian auto producers AVAZ, KMAZ, SVAV. We recommend to pay attention to Russian metals sector where we expect a spike of activity ahead of release MMK's financials. Overall, in spite of bad sentiment coming from Europe, most Russian stocks look strong here, we still see enough cash on the sidelines ready to be put to action in Russia.
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Old Jun 9, 2010, 7:49am   #6
 
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Morning Comment - 09.06.2010.

china white started this thread Good morning, just a very quick observation today. Trading volume on U.S. exchanges yesterday totaled 11.5 billion shares, the most since May 26 and 20 percent higher than the 2010 average. MORE shares changed hands yesterday than on June 4, when a commonly blamed combo of Europe’s jitters and US jobs report sent US indices down the loo.

Buyers are galore – and they are picking up paper in volumes. Lows of 25 May are pretty much re-tested, at least by S&P500. And the volume reading yesterday may well be the turn-around hint.

RUSSIA: Neutral opening is expected in Russia and the market is likely to jibber around until midday waiting for clues from UK and US. I, for one, am rather sick and tired of this scenario playing out almost each day. Russian bell-weathers trade on extremely attractive multiples - Gazprom, Lukoil at P/E ~ 5, and there is a plethora of Russian stocks 'one should have' in emerging markets portfolios. Yesterday we kept on trading on high volatility, with most of prop traders trying their best to guess the direction. Most of Russian chips continued to show their strength and we tend to think that until upcoming quarterly expiration the situation will not change dramatically; currency market is under pressure - Russian ruble trades @ 31,74 vs USD. SBER is very strong after earnings release; Utilities are under pressure (IRAO yesterday retested the low of the year); we continue to see good demand for telecoms ahead of upcoming AGMs; high volumes are seen in RTKMp; in metals & coal sector we had sellers in EVR LI, NLMK LI, BLNG, while RASP found some support comfort.

Good trading to you!
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Old Jun 10, 2010, 7:38am   #7
 
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TKB Capital - Morning Comment - 10.06.2010.

china white started this thread Good morning!

Very brief today. +10/-20 pts day on S&P yesterday with quite a few LONGs and SHORTs shafted in an equally gruesome way. Investors are currently VERY fearful and reacting quickly to both negative and positive news - with a lot of noise in the market right now. Technically - as I was mentioning all along - eyes on FTSE behaviour round 5000 line in the sand. I still think that given current liquidity, this may well shape up to be a double bottom

The only thing I REALLY do not like is BP stock -16% in ADR form with 7% of equity changing hands) -50p. Cameron will have to save BP – weeks into the office at Number 10 - and this may prove to be too much of a burden. One can live with an idea of Greece and Hungary going bust, but you cannot keep on taking this world as it is with UK on the brink. I am indeed talking worst case scenario here.

RUSSIA: is seen opening flat on mixed world markets, crude oil is stable at $74,5/bbl, commodities make attempts to rebound a bit. Most likely Russian equity market will trade in a range till expiration of futures & options on RTS Index on Friday. Yesterday we had another quiet day with low volumes across the board, Russian blue chips simply followed US index futures, although some pressure on every up-tick was seen. We had big buying interest in BANE/p as well as in other Bashkirian names; saw buyers in telecoms with sizable interests there; had bids in SILV/p, sellers in AKRN, sellers of BLNG; in utilities yesterday we had some capped flows - local buyers in IRGZ, TGKG, MRKU, OGKB, a couple of sellers in TGKE.

Good trading to you!
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Old Jun 11, 2010, 8:00am   #8
 
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Morning Comment - 11.06.2010.

china white started this thread Good morning!

We mentioned on the 07 June - see below - that “We still believe that the lows of 25 May (4900ish on FTSE100) will be re-tested. Best the bulls can hope for is a technical pattern that many call “Adam & Eve” where a quick dip down is followed by a broad double-bottom clearly resembling Eve’s fascinating parts

Take a “butcher’s hook = look” at the charts attached. Perfect double kiss on S&P and a classic “Adam & Eve” pattern on FTSE. I am getting quite bullish here as a matter of fact.

RUSSIA: Higher opening is expected in Russia by no means, but we think that in the second half of the day traders should think of cutting part of newly opened longs ahead of long week-end in Russia (DAY OF RUSSIA as it is now officially called), moreover today we face expiry of futures & options on RTS index, so a bit of volatility may well be expected after noon. Russian specifics, shall we say

Good trading to you!



--------------------------------------------------------------------------------
Sent: Monday, June 07, 2010 10:18 AM
Subject: TKB Capital - Morning Comment - 07.06.2010.
Importance: High


Quick morning comment. I vividly recall starting to hear about Hungary’s problems about 2 years ago – but then no one cared. These days round the skeleton is bang out of the closet! Now – monthly job report that failed to live up to its billing on Friday. Curious thing is that even though the unemployment rate went down more than expected, by levels that mattered to the market it was a disappointment - I am talking here about expectations that more than 500, 000 jobs would be added to U.S. payrolls. And those 2 things are blamed to pile up to bring all major indices to their knees into the Friday close.

From a macro perspective, BP disaster, European jitters, there seems to be plenty to worry about, but I am hearing quite a few lads and lasses out there, who look at the economic potential of companies, say that the risk-reward actually looks pretty good currently. One has to agree that for the most part, companies so far are providing very positive guidance for sales and profits for the balance of this year and going into 2011. That includes large cap technology firms with exposure to Europe saying they haven't seen any impact yet. For one, I will mention Cisco Systems Inc. CEO John Chambers here who is voicing the most optimism in years!!!

As we mentioned in our morning comment on the 26 May – see below – after S&P recorded a -35/+35 pts reversal the day before, “FTSE will most likely bounce back into 5100 territory, but knowing how old lady trades on breaking mega-levels of 5000 variety I expect yesterday's close to be re-tested next week. Again, 5200-5250 band (if it gets there) is likely to be a great SHORT opportunity”. This scenario has been playing out down to a T. We still believe that the lows of 25 May (4900ish on FTSE100) will be re-tested. Best the bulls can hope for is a technical pattern that many call “Adam & Eve” where a quick dip down is followed by a broad double-bottom clearly resembling Eve’s fascinating parts

LIQUIDITY WILL TELL YOU if it is indeed a double bottom in the making OR if we are in for a basement treat. Russian RTS Index JUN10 future (VEM0) just gapped down 4% at the open – hardly a glorious precursor.

RUSSIAN SINGLE STOCKS: On Friday we saw poor trading activity in most of stocks; in blue chips selling pressure prevailed though the market stood rather still in spite of bad sentiment almost till the closing bell. Stocks of gold producers PLZL, PMTL, retailers MGNT, FIVE LI were quite strong during the day; we saw nice support in LKOH. TNBP/p were well bid during the day with no sellers seen around. In utilities sector we didn’t see much of activity except local demand in IRGZ, TGKI, BEGY, careful bids in distribution companies, trades in OGKA, OGKB, OGKF. In metals & coal sector one could see big supply, local interests to buy EVR LI. We continue to see demand for airlines - AFLT, TMAT. Mid of the day will show the direction for the market. Good trading to you!
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Old Jun 15, 2010, 7:27am   #9
 
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Morning Comment - 15.06.2010.

china white started this thread Good morning! Very brief today - as Russia is waking up from an extended holiday, it is worth noting that on Western exchanges in the early going yesterday it was looking like the liquidity in the market (aka monies readily available to be put into action) was taking the upper hand over the global negativity hovering over the investors. Late going clearly changed the picture with S&P failing to take out an important confirmation level of 1100.

RUSSIA: Following Russian ADRs that grew yesterday by more than 1% on average, local market opened higher, also supported by more or less strong commodities and futures staying at the moment in green territory. Yesterday’s activity in ADRs was on extremely thin volumes, though we was big sellers searching for attractive bids. On Friday the market was well supported by positive US macro data and we continue to see ongoing rotation in many clients' portfolios; local accounts were better sellers due to ongoing redemptions. We had activity in BANE/p, buyers in TNBP with almost no offers seen; good demand for telecoms; metallurgical sectors keeps on trading under pressure (domestic accounts dominate); mixed flows in utilities sector (performance in last previous days looks worse than the broader market) - sellers in OGK4,6.

Shares of Uralkali will open with a gap on news that Suleiman Kerimov, Alexander Nesis & Filaret Galchev bought 53,3% (values @ $5,32 Bln) in the company from Dmitry Rybolovlev (yesterday ADRs rallied by more than 5%). According to Vedomosti Kerimov also bought 20% in Silvinit (valued @ $500 mln) from Mr. Rybolovlev. The biggest deal after Rusal's IPO after the crisis. Good trading to you!
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Old Jun 16, 2010, 7:24am   #10
 
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Morning Comment - 16.06.2010.

china white started this thread Good morning. There is a rhyming saying on the trading floor here - which would enrich any Cockney vocabulary if there was such a thing as Ruskie Cockney – “бабло и зло”, meaning roughly “money vs. evil” This is exactly the tug-of-war in the money we’ve been wrestling with for some time now - the liquidity in the market (aka monies readily available to be put into action) vs. the global negativity hovering over the investors.

Let us take a closer butcher’s, shall we? Evil did not go anywhere – BP bounce failed to materialize with a pathetic close yesterday, Greece’s downgrade concern is as strong as ever, with a list of countries lining up for potential crap-out growing every day. HOWEVER – liquidity flexed its muscles in 2 major ways yesterday: 1) News Corp.’s offer for British Sky Broadcasting showed corporate activity is not easing at all; and 2) US chipmakers confirmed growing demand for their chips.

Result? “бабло побеждает зло” – liquidity is winning over macro dark-cloud. Move from recession to recovery and onwards to expansion seems to be panning out now. In such a scenario stocks which are our top picks (among liquid DRs) – X5, Magnit and SeverStal – have no other option but to shine. Beaten-down developers of PIK and Mirland line-up – which are essentially a high BETA recovery bet – will rock’n’roll in such an expansion.

RUSSIA is opening in green zone due to positive US closing, strong Asian markets and stable commodities, oil is staying almost at $77. Yesterday trading activity was below average levels, at the same time most of blue chips spent the whole day in positive territory and closed at their HODs. Domestic accounts were buying across the board; most of ADRs were trading with a discount. We had buyers all day long in GMKN, GAZP, SNGSp, still saw interests in TNBP, BANE/p, were buyers in telecoms except RTKM, URSI, KUBN; were sellers in URKA after gap at the opening on news; sellers in RASP; saw demand for most of utilities. Good trading to you!
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Old Jun 17, 2010, 7:45am   #11
 
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Morning Comment - 17.06.2010. RASPADSKLAYA UPGRADE

china white started this thread Good morning - very brief today. 2 big things – in my opinion - have all the potential to lend a shoulder to market confidence and act as a catalyst to liquidity waiting to be put in action:

1) Tories showed that Gov’t can and will live up to its pre-election promise essentially eliminating loose Labour-invented “tripartite” system in financial regulations and being tough on Gov’t involvement in finance.

2) BP - well some will say having no other choice – showed that they can and will fire every ammo they have to deal with the financial aspect of the disaster. Even more importantly, BP’s divs seem to be roughly enough to pay off a significant part of the fund (7 mil quid vs. 13).


There will be casualties down the road, mostly pension funds in part living off those divs. As a side effect, there may be less involvement by those funds in Emerging Markets. However, on the grand scale of events these two are MEGA supporting stories – in my opinion.

RUSSIA: Mixed opening is expected in Russia and looks like the market will take a breath till macro data release in US; current crude oil levels support our oil & gas majors, other commodities are stable as well. Yesterday after positive opening we saw profit taking in liquid names since the very start of the session, though shares of Lukoil, Sberbank and RTKM/p were strong all day long. In small caps trading activity was not outstanding: we had sellers in utilities (HYDR, KZBE, OGK2, OGK6), buyers in some territorial generating companies. We continue to see ongoing rotation in several international small caps dedicated accounts: have sellers in quite illiquid stuff like CHLB, ANGS, SGAT, VHIM.

Yesterday our research team revised targets for Raspadskaya taking into account recent explosions at Raspadskaya coal mine which is the core asset of the company. Also we upgraded our coking coal prices forecast. As a result, we increased our fair price by 38% from $5.5 to $7.6 per share with upside potential of 80%. We recommend BUY the stock which is a long-term investment story. Pls see research note attached, I will also be commenting on this latest research in a separate note.
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Old Jun 18, 2010, 7:30am   #12
 
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Morning Comment - 18.06.2010.

china white started this thread Good morning – and just a very quick observation here really. Again – macro was by far less than spectacular yesterday; esp. jobs that showed the pace of a recovery might be modest. However – last minutes of trading – and guess what? Liquidity flexed its muscle. What is most interesting in my opinion is that it was consumer goods, energy, materials and technology stocks that turned higher. Demand is there and money is there.

RUSSIA: all day yesterday locals were shipping equities in whilst western accounts were on the other side of the fence. Almost all DR-s were trading at a discount to their local counterparts on MICEX. In blue chips we churned quite a bit in SIBN where we were preferred sellers and SNGSP where we were buyers. All day yesterday activity was moderate; however in the late going we saw a massive surge in liquidity with most issued well supported into the close.

Sector play: TNBP still bid up in a new price range, in BANE – sellers prevailing. Good demand for RASP, the rest of the sector was under pressure, shopping spree in most names in telecoms with virtually no supply. Activity in energos on the up, buyers in most names, however selling interest in MRK and selected OGKs should be noted.

Good trading on Friday to you!
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Old Jun 21, 2010, 7:55am   #13
 
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Morning Comment - 21.06.2010.

china white started this thread Good morning,

It is amazing now much attention in the British press Tony Hayward attracted after he took a day off Saturday to compete in a glitzy boat race around the Isle of Wight, and even more so, after he wimped out around the deadly submarine wall. Much less attention was paid to a couple of other things.


1. I can’t even blame the guy really for letting his hair down a bit. It is down to David Cameron and his men now – their “to do pronto” list just got bigger – and nastier. Set against the eurozone debt crisis, the City has been on edge for months now about the unhealthy state of the British public purse. With government borrowing at levels not seen since the WWII, Britain’s public deficit had rocketed to a record-high of 156 billion quid in the fiscal year that ended in March; worst thing being that tax pocket has been hit hard by recession. And now BP. For the time being BP seems to have bought itself some breathing space, first important thing for the week ahead is whether BP will be able to raise $ 10 bil from a bond sale – if they do they have the 20 bil they are needing for the escrow fund. However, the Tories undoubtedly realise that they will need to put some money aside to – somewhere down the road - help BP or bail them out – whichever wording you prefer .

The Tories will probably try to use the same medicine for all the nasty germs they have on their plate – austerity measures. 2nd thing to watch this week is Osborne’s emergency budget to be unveiled at 11:30 GMT tomorrow, Tuesday. We’ll see if he Tories are tough enough to quell down concerns about UK as a whole – those concerns are far more unnerving than all PIGS worries together. It is the fall of the UK that REALLY scares the market.

2. In a curious twist, thing to watch real close in this situation is TNK-BP. BP clearly stated that “there is no question of BP selling out of its Russian joint venture with TNK, as that operation accounts for 25% of its worldwide resources and around 10% of profits”. This is BP’s bacon, and things go sour there, that’ll be the worst precursor that BP – and Tories’ sterling effort to save it – comes a cropper.


3. Perhaps most importantly – there is a massive paradigm shift that is happening as a result of BP’s tragedy. The Americans are quite used to rattling their weapons threatening to reduce US dependence on foreign imports by increasing domestic oil production. They have been using that rattling as a fantastic bargaining point with world’s oil exporting nations for quite some time now. Now - that strategy is at serious risk with little prospect of opening other areas around the US to offshore drilling. That bargaining advantage is GONE for any foreseeable future – and this is WHAT REALLY PISSES AMERICANS OFF in regard to BP’s spew.

ANY OIL-EXPORTING EM COUNTRY NOW HAS A CHANCE FOR GLORIOUS TIMES . Where international money will end up flowing (Brasil, Russia, Middle East etc…..) will depend massively on tax regimes in respective oil-producing countries. We will be coming out with our Strategy for Russia’ Oil&Gas sector shortly – and will dwell upon this and other issues in much more detail. STAY TUNED!


4. Finally - from trading perspective - we will be watching how liquidity which is ABOUND in the market, ends up reacting to news from China. There is ALL the potential in the markets to confirm that it double-bottomed, and if the confidence is further strengthened from the UK this week, a massive rally is on the cards.

RUSSIA re-coup for Friday: all day market traded sideways with SBER, HYDR and RTKM/p shining brighter than other blue chips. Energos were well bid, most notably HYDR and IRAO. Distribution grids were under pressure pretty much across the board. Good bids in the late going in Surgut c/p, MTS, Severstal, GMKN and FSK.

Good trading week to you!
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Old Jun 22, 2010, 7:42am   #14
 
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Re: Russia's RTS Index futures - liquid tradable instrument.

china white started this thread Good morning!

Remember the book ‘China Shakes the World’ by James Kynge? We can hardly say that yesterday news from China shook the world looking at markets’ performance in US. Technically indices do not look good and we should get additional very strong trigger to keep on climbing. Clearly, we had a very disappointing end to trading session in the US yesterday. However, let us not forget that the S&P 500 has just completed its biggest two-week rally since November! A technical chartist would point out here that we are stuck to 200 day moving average which – at this juncture – is tacked to 1110-ish confirmation “neck” for the recent double-bottom. Some “yo-yo” style trading round this level may well be in order. There is much liquidity round, as we have been pointing out for some time now, and that liquidity keeps on providing the hard floor that selling attempts bounce off.

Yesterday morning Russian and European bourses took a nice start following Asian markets and rallying metals. Market however decided that news from China can not provide that trigger at the moment that will push the markets higher. Activity in blue chips sector yesterday was good and we saw both domestic & international accounts fixing profit at market since the very opening scaling up. Steel sector was well bid all day long – nice demand was seen in SVST, MMK, NLMK; in utilities sector activity was lower than average, though we continue to see strong bids in TGKs; sellers in OGKD, OGKF; in telecoms we still have strong interest in most stocks especially in URSI & ENCO; in Rostelecom (RTKM & RTKMp) we see very strong flows ahead of AGM.

1. We have upgraded target price for OGK4 (OGKD) to $ 0.118/per share, which implies 44% upside to the current market quotes and reiterate our BUY recommendation for the stock. OGK-4 is our top-pick in the wholesale thermal generation sector. We consider the financial results of OGK-4 as positive. The EBITDA is 24% higher than our expectation. We have revised our financial model, taking into account the reported results and introducing a WACC of 11.84%.

2. Tatneft (TATN) reports 1Q10 US GAAP results. NEUTRAL

3. Ashinskiy MZ (AMEZ) plans to increase steel output by 29% in 2010. POSITIVE Rolled products output growth should amount 12% in 2010. Ashinskiy Metal Works (AMZ) in 2010 plans to increase its steel output by 29% y-o-y to 800 Kt. The company also intends to expand rolled products output by 12% y-o-y to 600.5 t. According to AMZ, the growth of output should be reach due to increase in carbon and stainless sheet production. The new electric furnace should boost production growth. We regard this news as positive for AMZ. We note that the company’s plans top our expectations. The launch of 1 mn tons capacity electric furnace in July, 2010 is expected to boost the plant’s production. We maintain our positive view on AMZ’s stocks. We recommend BUY its shares with the fair price of $0.579.

4. Osbourne’s emergency budget to be unveiled today will or will not give the market that extra bit of confidence that it needs.


GOOD TRADING TO YOU TODAY!
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Old Jun 23, 2010, 7:34am   #15
 
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Morning Comment - 23.06.2010.

china white started this thread Good morning!

We mentioned before that the Americans are quite used to rattling their weapons threatening to reduce US dependence on foreign imports by increasing domestic oil production. They have been using that rattling as a fantastic bargaining point with world’s oil exporting nations for quite some time now. Now - that strategy is at serious risk with little prospect of opening other areas around the US to offshore drilling.

Yesterday it was little surprise to us when the White House said it would fight a court ruling that lifted its ban on offshore oil drilling. That bargaining advantage is GONE for any foreseeable future – and this is a really important paradigm shift in regard to BP’s spew. Of course things may look gloomy – esp. given yesterday’s close, with Oil sector tanking generally and certain related companies (Halliburton, Baker Hughes) getting completely mauled – however, as we mentioned in our previous comments – going forward this shift will massively benefit SELECTED oil-exporting Emerging Markets. Whether Russia will be that SELECTED – will hugely depend on tax brackets. We will discuss this in more detail in our Strategy note due in a week or so.

On other fronts – 2 important things: 1) Tories in my opinion delivered, managing to walk between a hammer and a hard place, by showing the City they are tough enough to “fix” the UK but NOT overly austere to drive money out of the City; and 2) Demand for chips and hi-tech products is firmly there and growing - as Apple’s story would attest to – and you do not choke up your last twopny bit to buy that sector! This, given liquidity in the market, makes me think that any bear moves that may happen into the summer, will present a compelling buying opportunity.

RUSSIA: Yesterday we had good activity in blue chips since the very opening (in GAZP, LKOH, SBER, HYDR, IRAO, CHMF, RTKMp), after lunch the market was very calm till US housing data and we had sellers till the closing bell. In telecoms we kept on buying RTOs: traded good chunks in ESMO, ENCO, URSI - looking to buy more, others are welcome except URSI, ESPK, KUBN; continue to have good trading activity in metals sector - steel names are still in demand (CHMF, MMK), also traded VSMO. In later going we traded Gazprom DRs in size. In small caps investors tend to wait for a turnaround in liquid sector - therefore activity was quite small.

Good trading to you!
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