Russian stocks follow Europe up, RTS surpasses 1500
MOSCOW. Nov 3 (Interfax) - After falling on news from Greece and the U.S. Federal Reserve, Russian shares began to pick up Thursday afternoon following Europe up and quickly recovering losses triggered by divisions in the Greek government and the RTS index, which had dropped below 1470 points surpassed the 1500 point threshold.
As of 2:00 p.m., Moscow time, the MICEX was down 0.8% to 1476.97 and the RTS was down 1.1% to 1509.22 points. Blue chip prices were up and down within a 3% range.
On the MICEX, prices were down 1.4% for VTB , 0.1% for Gazprom , 0.1% for Gazprom Neft , 0.3% for Lukoil , 1.4% for Polyus Gold , 0.6% for Rosneft , 1.7% for Rostelecom , 0.7% for Sberbank Russia , 1% for Surgutneftegas and 0.4% for FGC UES .
Norilsk Nickel hit a one-year low before recovering somewhat and in the afternoon shares were down 2.7% to 5629 rubles, after falling to 5422 rubles in the morning after Wednesday's publication of the buyback ratio of 10.95% (holders of 62.8% of charter capital tendered for the buyback), which disappointed investors.
Analysts say majority shareholder Interros tendered its entire 30%, despite the fact that part of the stake was held in plege, which lowered the buyback ratio for minority shareholders.
On the MICEX, share prices were up 1.1% for Novatek , 0.1% for Tatneft and 0.5% for Transneft .
Wall Street climbed Wednesday encouraged by ADP Employer figures showing that the number of jobs in the U.S. economy grew by 110,000 in October instead of the 100,000 expected.
Anticipation that European leaders would ensure implementation of the Greek rescue plan approved at last week's EU summit, despite Athens saying it would hold a referendum on the issue, also backed the U.S. markets.
However, after a meeting with Greek Prime Minister George Papandreu, EU leaders said new financial aid would be provided if there was a positive result at the December referendum.
The New York Times reported that without foreign support the Greek government will run out of money in mid-December.
The Greek parliament is debating a confidence motion in the government after which it may approve the referendum.
The U.S. Federal Reserve slashed its forecast for growth and refused to take extra steps to stimulate the economy. The news pushed stocks down in Asia Thursday and Europe opened on a negative note.
Greek Finance Minister Evangelos Venizelos spoke out against the referendum and if the government does not receive support Greece could be faced with early elections.
European indexes began to climb (the FTSE, S&P 350 and DAX went up 0.2%-0.4%), U.S. futures fully recovered the mornings losses (the S&P 500 cancelled out its early 1.5% drop) and oil prices rose.
December futures contracts on WTI oil were up 0.1% as of 2:00 p.m., Moscow time to $92.58 per barrel and Brent futures were up 0.1% at $109.41 per barrel.
Investors are still worried about uncertainty in Greece, said Dmitry Parfenov, head of analysis at Olma. Concerns grew after EU officials said financial aid would be allocated only if there was a positive result from the referendum, which is likely to take place in early December. The results of the Federal Reserve meeting also failed to encourage optimism, although the Fed did not rule out new measures to stimulate the economy so far no measures were adopted and the forecast for the U.S. economy was slashed.
The fact that November 4 is a public holiday in Russia is influencing the market with decisions being postponed for next week as the long weekend brings additional risks (several important events are expected such as the Greek parliament's decision on confidence in the government and U.S. statistics from the labor market for October).
After a negative backdrop in the morning, Russian blue chips edged up. Technically the MICEX corrected up to 1430 points. However with investors keen to take profits ahead of the long weekend a bearish mood may set in toward the evening. Even amid positive macrostatistics from the United States, the Russian market is likely to close on a negative, said Anton Zhukov of the Moscow Stock Center.
Announcement of the Greek referendum dates for December 4-5 caused despair for Russian investors in the morning and only a correction in Europe was able to calm the situation, said Oleg Dushin of Zerich Capital Management.
The G20 summit starting in Cannes Thursday may lead to steps to ease the situation. In addition, the ECB is expected to lower interest rates. The Greek referendum may include the issue of EU membership, which Greek workers earning in euros could support.
The mid-term mood on the market will also be affected by U.S. employment statistics. Considering the ADP report the news may be fairly good. Dushin expects the Russian market to open on a positive note after the long weekend.
Kirill Tischenko of Akmos Trade does not share this optimism and says the RTS is heading for 1400 points.
It is unlikely that anyone seriously believed Greece could be saved by allocating financial aid. October was full of hope about rescue for Greece and a third round of bond purchases from the Fed, but November has dashed these illusions with Greece raising the referendum issue and the Fed keeping quiet about QE3.
The psychological impact of year-end is also playing a role on the market with dealers choosing to take profits to provide more or less positive statistics in December, rather than wait for a Christmas rally that many not happen.
So Tischenko believes the RTS is moving down toward 1400 after which it may stop before the correction continues. Turbulence in the European banking system after possible default in Greece could postpone economic growth around the world for another six months to a year, dooming the bubble on the oil market, which is supporting Russian share quotes, to burst, the analyst says.
While the market is uncertain a lateral trend can be expected within a range of 1250-1550 on the MICEX, said Alexander Timoshenko of Alfa Capital. The economic situation will make players switch to active portfolio management, reviewing portfolios for bad assets more and more often.
The euro looks unsure against other currencies, including the dollar and it could reach $1.3 toward the end of the year, the analyst said.
Among the second-tier shares on the MICEX, prices fell 4.4% for Diode Plant, 4.2% for Uralkali , 4% for Irkutskenergo , 3.7% for OGK-2 and 2.6% for IDGC Center and Volga.
Prices went up 1.8% for TGK-9 , 1.7% for OGK-5 , 1.2% for IDGC North Caucasus and 0.5% for OGK-3 .
Trading volume on the RTS as of 2:00 p.m., Moscow time totalled $266.22 million and exceeded 40.0 billion rubles on the MICEX (including 15.84 billion rubles with Sberbank common shares).