FINANCIAL ANALYSIS
by Chris Weafer
Moscow’s bourses will likely start the new week with a modest amount of relief that the US markets clawed back some of Friday’s early losses and because the price of Brent reversed a $2 p/bbl loss to end the session off only 26 cents. Asia’s markets will, however, play catch-up, reflecting the disappointment elsewhere with the US payroll report and also because of the higher than expected China inflation number released on Saturday. The prudent approach, likely to be adopted by most investors, is to remain on the sidelines until the follow-through from the US comes clear over the next couple of days (see below).
The main directional driver of Moscow’s bourses continues to the trend, and newsflow, in global markets rather then the improving domestic picture. While that is unlikely to change all summer the domestic story is clearly improving. A more solid platform for market performance is being built for the autumn, especially if global markets can at least maintain a modest recovery. The best themes are still likely to be those with a domestic growth and infrastructure bias. Shorter-term, the steel names will remain the high-beta plays.
Russia’s next IPO will be Phos Agro. It is scheduled to close, and price, the issue on Wednesday. The issuers have learned from other’s experience and have already cut the initial target valuation from the $7.1 - $8.8 bln range to a more modest $4.8 to $6.1 bln range. The aim is to raise $500 mln and that, if successful, will add to the $3.87 bln already raised from 6 IPOs this year plus $3.88 bln from 3 SPOs.
The full note, with this week’s market diary, stock watch, Russia update (economy, social, politics, market reforms), oil comment, weekly funds flow analysis, and tables showing the best and worst share performance of last week and year to date, can be downloaded here Download Russia_Week_July_11_11
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