RISING OIL RISK PREMIUM AND WTO PROSPECTS

FINANCIAL ANALYSIS

by Chris Weafer

I'm living so far beyond my income that we may almost be said to be living apart

                                                                                                             E. E. Cummings

Asia’s markets have started the week by extending Friday’s gains on Wall Street. Commodity prices are also trading better as investors interpret events in Europe positively. One month Brent is above $110 p/bbl and copper is 3.2% higher. Gold last traded at $1645,9 p/oz and the euro is also up against the dollar at $1.389. All of which bodes very well for a positive start to the week’s trade on Moscow’s bourses and for strengthening of the ruble relative to the dollar.

There are currently three important events that, depending on how they play out, will have an important impact on how Russian equities and the ruble trade over the remainder of 2011. All three are external to Russia. These are a) the policy response in Europe and the US to the euro zone debt threat and the risk of a slowing in the US economy, b) Russia’s WTO entry process and, c) events in North Africa and the Mid East.

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