Russian stocks make weekly gains on Trump win, ruble falls with oil

MOSCOW, Nov 14 (PRIME) –The Russian stock market rose in the trading week from November 7 through November 11 on the back of Donald Trump's election win, although the rise of the dollar-denominated RTS was limited by a ruble depreciation.

The MICEX rose 3.53% to 2,031.92 and the RTS added 0.64% to 970.15, according to the Moscow Exchange. The ruble depreciated to about 65.8 against the U.S dollar from 63.6 during the week.

“Hopes that the Russian–U.S. relations will improve and the anti-Russian sanctions will be softened was the main driver for the Russian benchmarks,” Igor Kovalyov, an analyst at InstaForex group of companies, said.

Alfa-Capital analyst Andrei Shenk said, “Trade was very volatile last week because Trump unexpectedly won the U.S. presidential elections, which primarily triggered capital outflow from riskier assets – raw materials prices and currencies of emerging countries were put under pressure.”

Global markets will continue adjusting to the results of the U.S. elections this week. Investment company Veles Capital said in a research note, “We expect that the euphoria on the Russian market will come to an end soon because it is hard to predict further actions and statements of the U.S. newly-elected president.”

Investors expect that Trump will conduct a stimulating fiscal policy, which means more room to raise interest rates, backing the dollar and putting the ruble under pressure, analysts said.

Irina Rogova, an analyst at the Forex Club group of companies, said, “The start of the new trading week will heavily depend on dynamics of oil prices. If the Brent price manages to rebound, the ruble may also rebound to about 64.8 against the dollar.”

Absolut Bank’s analyst Yegor Musatov said that the ruble will be less volatile and the national currency may be traded in a 65-66.5 band against the dollar this week.

Promsvyazbank analyst Yevgeny Loktyukhov said, “On Monday, investors will stay wary ahead of publication of the Chinese industrial production, retail sales and investment in infrastructure figures, which may support metals markets. The U.S will release statistic on retail sales and industrial production, as well as the consumer price index (CPI) data later in the week.”

CORPORATE STORIES

Top Russian lender Sberbank rose 6.14% to 151.51 rubles and oil giant Gazprom increased 5.7% to 147.88 rubles. The companies are a safe haven when attitude towards Russian assets changes, Andrei Kochetkov, an analyst at Otkritie Broker, said.

Loktyukhov said that Gazprom was also supported ahead of the first reading of the 2017 budget by the State Duma, the parliament’s lower chamber, where the government wants the company to pay higher dividends.

Metals and mining giant Mechel soared 31.19% to 185.9 rubles and coal producer Raspadskaya gained 6.63% to 72.98 rubles, while coal and steel companies were supported by a rally in coal prices, which caused a rise in ore and steel prices, as well as by a weaker ruble, according to the analyst.

Steel producer Novolipetsk Steel (NLMK) jumped 17.7% to 117.35 rubles and another steel manufacturer Severstal increased 10.7% to 933 rubles.

Aluminum producer RUSAL, which surged 20.86% to 274 rubles per Russian Depositary Receipt (RDR), was also supported by a report that its net profit doubled on the quarter to U.S. $273 million under International Financial Reporting Standards (IFRS) for July–September.

Other exporters which gained from the ruble depreciation against the dollar, included fertilizer producers PhosAgro and Acron, which rose 7.38% to 2,416 rubles and 3.45% to 3,150 rubles, respectively, as well as uncut diamond mining giant ALROSA, which grew 2.8% to 87.12 rubles.

Troubled airline Transaero, which earlier rallied on hopes that the company’s activities may be resumed, plummeted 26.84% to 4.17 rubles. Vitaly Manzhos, a senior analyst at Bank Obrazovanie, said that the company, whose air operator certificate was recalled in 2015, is unlikely to resume operations after such a long break.

Metals company Norilsk Nickel rose 10.84% to 10,150 rubles. The company’s board of directors has recommended paying $1.1 billion, or 444.25 rubles per share, in dividends for January–September.

Oil producer Bashneft rose 5.34% to 3,482 rubles per common share, because Rosneft plans to buy back company’s shares at an above-market price, according to Loktyukhov.

Mobile operator MegaFon, whose IFRS net profit halved on the year to 6.346 billion rubles in July–September, went down 4% to 580.8 rubles.

The Moscow Exchange decreased 2.36% to 112.2 rubles on the back of a 9.9% fall in the net profit for July–September.

Private oil company Lukoil gained 3.62% to 3,092 rubles supported by the news that its Vice President Leonid Fedun said it has no plans to participate in privatization of Rosneft, Loktyukhov said. Investment in its own projects may be better for the company than the purchase of a minority stake in another oil producer.

Oil and gas company Surgutneftegas added 1.13% to 29.63 rubles per preferred share due to the ruble weakening. “Surgutneftegas’ preferred shares are rising: if the ruble rate against the dollar is close to 72 by the end of the year, the company will have no forex losses and may pay higher dividends,” Sofya Kirsanova, an analyst at managing company Raiffeisen Capital, said.

Russian silver and gold producer Polymetal International contracted 4.78% to 697 rubles, depressed by lower prices for precious metals, and country’s largest gold producer Polyus fell 1.26% to 4,471 rubles. Polyus reported that its net IFRS profit leaped by 90% on the year to 25.446 billion rubles in July–September.

Below are the MICEX’ five most active stocks from November 7 through November 11:

Company	Change, %	Last price, rbl	Trading volume, bln rbl
Sberbank	+6.14	151.51	51.326
Gazprom	+5.70	147.88	39.654
Norilsk Nickel	+10.84	10150.00	14.943
Magnit	-4.34	9910.00	14.469
Lukoil	+3.62	3092.00	14.128

REPORTING THIS WEEK

On Monday, Russia’s second largest bank VTB Bank will release IFRS results for January–September and United Aircraft Corporation (UAC) will report results under Russian Accounting Standards (RAS) for the same period. Dixy Group, one of country’s largest grocery retailers, will publish operating results for October on Monday and IFRS results for July–September on Wednesday.

Sberbank will report IFRS results for January–September on Tuesday. Meat producer Cherkizovo Group plans to publish IFRS results for January–September on Wednesday.

On Thursday, fertilizer company PhosAgro will release IFRS results for January–September and mobile operator MTS will report IFRS results for July–September.

(65.2167 rubles – U.S. $1)

End