The share market of the Russian Federation next week stabilizes, the ruble will grow


MOSCOW, 9 Oct.Prime, Dmitry Mayorov, Elena Likova. Analysts of investment companies and banks expected next week to stabilize the market consensus earnings and growth of the ruble against the Euro and the dollar, according to data of the survey conducted.

In line with the consensus forecast, based on expectations of analysts, the MICEX index for the week will be reduced by 0.6%, and RTS will not change. The price of Brent crude oil will grow by $ 2.5 to 55.5 dollars per barrel and the Euro / dollar exchange rate will remain approximately 1,13 dollar. The ruble against the dollar will increase by 56 cents, and against the Euro by 40 cents, analysts expect.

MARKET DRIVERS

Recent data from the U.S. shows the American economy passing the peak of growth, the earnings season in America started not very well (Alcoa reported weak), and the FOMC minutes pointed to the fact that the regulator is not ready to rush into raising rates because of low inflation and external (Chinese) economic risks, which removes the prospect of tighter fed policy, says Eugene Loktionov from PSB.

“Against this background, the renewed increase in the equity markets and in crude oil (Brent moved to the 55-57 dollars per barrel), revived the bulls in gold (our goal remains the same, we expect the transition in the range of 1150-1200 per ounce),” he commented.

Next week markets will continue to react to the distance of the tightening cycle in the U.S. next year, spurring demand for assets in emerging markets and raw materials.

Earlier analysts of the company “BCS Premier” noted that the initiative in these sectors can move to the side of the buyers amid rising tensions in the middle East and the fall of oil production in the United States. “Quotes of North sea Brent mix went up to a target of 53.5-54.3 USD per barrel. Potential breakdown of this area could trigger the continued growth of 58.1-59.4 per dollar”, — commented Sergey Danilov from this company.

In the focus of the week will be important economic data from China: the foreign trade statistics and inflation, says Georgy Vashchenko from the company “freedom Finance”. In the USA the data about dynamics of retail sales, inflation and the producer price index and the Eurozone inflation and industrial production, he recalls.

“The consensus view is that the possibility of economic slowdown in China and zero inflation in the United States. If data is in accordance with expectations, it will also reinforce the confidence of investors that the fed will wait a little with the increase in the key rate,” he adds.

POSITIVE THE RUSSIAN MARKET

The past week can be characterized as moderately positive for the domestic stock market, notes the analyst of the company “invest-Profit” Alexander Petkov.

“Since the beginning of the month, there is a growing trend in the securities of Russian issuers. The major indices continue to grow, fueling the interest of investors, securities issuers, oriented on domestic demand,” he commented.

Record from the end of April 2015, the inflow of funds of non-residents on the Russian stock market, says Danilov. As follows from the data of Emerging Portfolio Fund Research, foreign investors for the first week of October, bought Russian stocks to 100,5 million dollars, the analyst adds.

However, as remarked Andrei Vernikov of “Zerich Capital”, for our market associated with geopolitics, to be meaningful the output of the report downed on 17 July Malaysian Boeing.

“Sources report that the report is written in soft colours and does not contain specific allegations, but sources could be wrong. In the worst case report may initiate further tightening of sanctions against Russia, which the economy is not ready. Official forecasters believe that next year Russia’s economy will grow by 0,5-0,8%, but it is not growth but stagnation,” he commented.

THE MOVEMENT OF INDICES

On the next trading week Daniel Egorov from Dukascopy Bank SA expects to see growth of the Russian share indexes following the oil prices and a strengthening ruble.

And grow will not only rouble, but also other emerging market currencies, the main reason for the strengthening of which will be a further decline in the U.S. dollar on expectations of an extended period of low interest rates in the U.S. by 2016, he explains.

“As a positive factor and we note the narrowing of the country award at the background while running without incident of a military operation of Russia in Syria and statements by some Western analysts about the possibility of (partial) lifting sanctions on Russia in the first half of next year,” said Loktionov.

The Russian market will grow under the influence of the external background and growth of oil prices, I’m sure Vashchenko. The RTS index may reach the level of 200-day average guideline for the week will range 880-900 points, a benchmark index MICEX — 1700-1730 points, he predicts.

And according to Vernikov, most likely next week our market will show lateral dynamics.

THE DOLLAR MAY GO TO 60 RUBLES

On the next trading week, we expect to see a rise in the ruble after the price of oil. The ruble against the dollar may rise to 59 rubles, says Egorov.

Loktionov expects to continue this week, the phase of growth of the Russian stock market amid positive external factors and trends towards the strengthening of the ruble (the interval 58-60 in tandem with the dollar).

Growth next week the cost of oil of mark Brent to level 55 per barrel will lead to the strengthening of the ruble to the level of 59-61 per dollar, estimates Vashchenko.

At current prices, the dollar has no preconditions to reduce below 60 rubles, said Vernikov. “It will impact on the budget. Can puncture this level for a day or two, after which the Central Bank will make efforts to weaken the ruble. Current levels favorable for buying us dollar with a focus on December”, — he said.

The ruble will be difficult to overcome the level of 60 against the dollar, also says Roman Tkachuk from “Pragmatics”.

“Western countries have a negative attitude to the Russian military operation in Syria. In addition, on 13 October will be published the final report on the causes of the crash in Eastern Ukraine of flight MH17. Possible new round of tensions with Ukraine and Western countries. In our opinion, from the current levels one can look to buy the currency,” he added.

Further growth of the Russian ruble will hurt the sector and will force to review the budget figures, says Anna Bodrova from the company “Alpari”. “If market conditions will not change in the near future, it will become CB. The US dollar will spend the next five trading days in the range of 60.20-65,50 ruble. Euro potorguemsya within the 68-73 mark of the ruble,” she added.

The volatility of the oil market can not form a reliable trend on strengthening of the Russian currency, and additional limiting factor is the ability of the CBR to market with purchase of foreign currency, also believes Vladimir yevstifeev of Bank Zenit.

INTERESTING IDEAS

Among attractive securities the notes Loktionov the oil and gas sector, as well as oversold metallurgists.

“Our favorites for next week still — LUKOIL and Norilsk Nickel, counting on the return of the rate to 2500 and 10,5-11 thousand rubles, respectively. Waiting for the rally in long-term attractive the shares of “RUSAL”, if stats on China will not disappoint and frontal growth of the shares of electric power industry, whose evaluation is mainly continue to stress levels,” he says.

Shares of leading banks, according to him, have already not so big potential of growth: Sberbank’s target level of 88 to 90 rubles, VTB — 7,7-8 cents.

Better the market shares of banking, oil and gas sectors: leaders will be shares of “Gazprom”, Sberbank, VTB, says Vashenko. Worse the market papers of Norilsk Nickel, Uralkali, as well as other exporters of metals and fertilizers, he said. “In the telecoms sector and retail expected move in different directions,” adds the analyst.

Better than the market in the next five trading days will look the shares of Russian oil and gas companies, which quotations will follow the oil price, says Egorov. “We are allocating the shares of LUKOIL and NOVATEK, while the strengthening of the ruble could negatively affect the stock price of metallurgical companies,” he notes.

On the background of strengthening of the ruble become an attractive paper companies focused on domestic demand, also notes Tanurkov.

“Our favorites — Sberbank and MegaFon. We also recommend you shares of LUKOIL, affected by the selling amid concerns about the excessive growth of the tax burden on the oil industry — the worst fears did not materialize, and oil stocks again become attractive,” — says the analyst.

Of attractive stocks Vernikov marks Norilsk Nickel. But we have to buy it at a small fraction of the portfolio, he adds. “News by company go bad, and we cannot exclude such an option that the quotes strikes support 9000 rubles, after which the decline accelerates. This is not our baseline scenario — the baseline assumes growth of quotations at least to 9600,” — says the analyst.