Russian stocks post weekly gain on OPEC deal, sanctions easing hopes

MOSCOW, Nov 21 (PRIME) – Russian stocks increased in the trading week ended November 18 on the back of a rise in oil prices caused by expectations that OPEC may reach an oil output agreement and due to hopes that the Russian–U.S. relations will normalize in the future; the dollar-denominated RTS was particularly backed by a ruble rise against the U.S dollar amid higher oil prices and the new tax payment period.

The MICEX added 0.31% to 2,038.29 and the RTS gained 2.13% to 990.77 from November 14 through November 18, according to the Moscow Exchange. The ruble strengthened to 64.7 against the U.S dollar by the end of the trading session on November 18 from about 65.5-66.5 at the beginning of the week.

"Comments of Russian Energy Minister Alexander Novak that OPEC countries are very likely to reach an agreement on November 30 and Russia will join the implementation of reached agreements caused a rally in raw material markets," Sofya Kirsanova, an analyst at managing company Raiffeisen Capital, said.

Sergei Kozlovsky, head of the analytical department of brokerage company Grand Capital, said, "The market was supported by an oil price rebound on the news that Russia is ready to support any agreement to limit the global oil supply, and because global stock markets welcomed Donald Trump's election win."

Forex Club group of companies' analyst Irina Rogova said the growth of Russian stocks was limited because U.S. Federal Reserve System (Fed) chair Janet Yellen "hinted that the key rate may be increased in the nearest future and put riskier assets under pressure."

Kozlovsky said, "As for the currency market, the ruble followed oil price dynamics during the whole week."

The analyst said that Russian stocks may consolidate in anticipation of a summit of OPEC scheduled for November 30 or any news concerning plans of the U.S. government this week.

Promsvyazbank analyst Yevgeny Loktyukhov said that investors will keep an eye on statements of OPEC countries' representatives, as well as minutes of the Fed, which will be published on Wednesday.

Rogova said the coming tax payments’ peak will additionally support the ruble this week.

CORPORATE STORIES

Russian power holding Inter RAO rose for five days in a row and jumped 10.96% to 3.9945 rubles from November 14 through November 18, while the company's shares were included in the MSCI Russia stocks index.

Russia’s Federal Grid Company of Unified Energy Systems (FGC UES), whose net profit almost doubled on the year to 59.2 billion rubles in January–September, as calculated under Russian Accounting Standards (RAS), gained 8.79% to 0.17989 rubles.

Wholesale Generating Company-2 (WGC-2) rose 6.92% to 0.4309 rubles, power utility Mosenergo grew 4.13% to 2.168 rubles and Territorial Generating Company-1 (TGC-1) jumped 9.22% to 0.009065 rubles. Loktyukhov said the power producers affiliated with Russian gas giant Gazprom rose on expectations of strong financial results.

Igor Arnautov, an analyst at investment company Veles Capital, said investors expect WGC-2 and state-controlled power utility Russian Grids to pay high dividends. Russian Grids surged 12.89% to 1.1515 rubles.

M.Video increased 4.12% to 351.4 rubles during the trading week. The expert said that the electronics retailer was backed by expectations that its sales will increase in anticipation of the New Year's holiday period.

PhosAgro, whose net profit soared 54% on the year to 48.5 billion rubles in January–September, as calculated under International Financial Reporting Standards (IFRS), rose 3.15% to 2,492 rubles. Loktyukhov said that the fertilizer producer was supported by its plans to pay dividends at least at the last year's level.

According to Kirsanova, the shares also rose because PhosAgro's CEO Andrei Guryev said the company will cut investment program to 25-30 billion rubles in 2017 from the current 34 billion rubles which will increase its cashflow, so PhosAgro may raise dividend payouts.

Bashneft gained 1.49% to 3,534 rubles per common share, while another oil producer Rosneft sent a mandatory buyout offer to its minority shareholders to buy common shares at a price of 3,706.4 rubles per security, according to Igor Kovalyov, an analyst at InstaForex group of companies. The preferred stock of Bashneft lost 7.94% to 1,310 rubles per share.

On November 15, the Investigative Committee detained Economic Minister Alexei Ulyukayev and launched a criminal case on charges of receiving a U.S. $2 million bribe for granting the ministry’s approval that allowed Rosneft to buy the state’s 50.08% stake in Bashneft. Svetlana Petrenko, the acting head of the committee’s public relations department, told PRIME that the legitimacy of Rosneft buying the stake in Bashneft is not disputed by anyone and the deal is not a part of investigation.

Coal producer Raspadskaya went down 4.91% to 69.4 rubles because a rally in coal prices stopped.

Uncut diamond mining giant ALROSA, whose rough and polished diamond sales amounted to $439 million in October amid strong demand, gained 1.61% to 88.52 rubles. Company's sales stood at $454 million in September.

Dixy Group, one of country’s largest grocery retailers, fell 5.08% to 299 rubles during the trading week ended November 18. The company released weak IFRS results for July–September. Andrei Kochetkov, an analyst at Otkritie Broker, said that Dixy's net loss almost doubled to 1.59 billion rubles, although its revenue rose 14% in the period.

Oil company Tatneft jumped 8.21% to 386.8 rubles. In late October, the producer reported a 9.4% increase in net profit for January–September, as calculated under Russian Accounting Standards (RAS).

Vitaly Manzhos, a senior analyst at Bank Obrazovanie, said that the shares were attractive for long-term investors. Kirsanova said that investors expect Tatneft to announce details of its dividend policy during an investor day which will take place in London in mid-December.

Russian silver and gold producer Polymetal International contracted 12.63% to 609 rubles on the back of lower prices for precious metals.

Shares of mobile operator MegaFon, which were excluded from the MSCI Russia index, fell for five days in a row and lost 7.11% to 539.5 rubles.

Below are the MICEX’ five most active stocks from November 14 through November 18:

Company	Change, %	Last price, rbl	Trading volume, bln rbl
Sberbank	-0.96	150.05	29.922
Gazprom	-0.62	146.96	20.479
Norilsk Nickel	-0.06	10144.00	10.100
Lukoil	-0.24	3084.50	8.324
Moscow Exchange	+0.37	112.62	7.451

REPORTING THIS WEEK

On Monday, agricultural producer Rusagro will release IFRS results for July–September, ALROSA will report IFRS results for July–September and January–September, and power producer Territorial Generating Company-1 (TGC-1) will publish IFRS results for January–September.

Russian payment services provider Qiwi is expected to report IFRS results for July–September on Tuesday.

On Thursday, oil producer Gazprom Neft will publish IFRS results for January–September and another oil company RussNeft will release IFRS results for July–September. RussNeft will hold an IPO on the Moscow Exchange on Friday.

(65.1023 rubles – U.S. $1)

End