The same thing
Russian stock market began the week with the continuation of the neutral dynamic of the last few days. The Moscow Exchange Index is consolidating around 2430-2450 points, without showing a pronounced trend. Trade turnover on Monday fell below 30 billion rubles, reflecting a slight decline in participant activity due to the flat trend.
Only the information technology sector looked significantly better than the market (+ 1.1%) against the backdrop of the growth of VK, HeadHunter, Yandex and Ozon – in the near future it may continue to trade slightly better than the Moscow Stock Exchange index.
Sale in OFZ. After the weekend, many investors rethought Friday’s signals from the Central Bank of the Russian Federation on the completion of the monetary policy easing cycle, which led to a significant drop in the price of government bonds.
Traditionally, longer OFZs with a constant coupon have decreased the most. The government bond index (RGBI) fell 1.2%, the largest daily decline in the past five months. Holders of long stocks see no room for positive revaluation over the medium term. On the contrary, inflationary risks will prevail over the next few months.
The decline in OFZ will likely be short-lived, limited to 2-3 sessions. After all, the general situation on the debt market is still neutral. If inflationary pressures remain subdued until the next meeting on 28 October and there is no strong fiscal stimulus, a key rate cut of another 25bps to 7.25% is acceptable.
Which bonds are protected? While bonds with a one-year maturity are actively declining, there are debt securities that are not responding to changes in Central Bank policy. These are issues with a variable coupon linked to the RUONIA market rate (OFZ-PK). For them, the interest risks are mitigated and practically do not depend on the maturity. For example, among the OFZ, these are serial numbers with numbers from 29006 to 29019.
The value of RUONIA, on which the coupons depend, usually fluctuates around the level of the central bank key rate with a small premium or discount. That is, if tomorrow the Bank of Russia suddenly raises the key, the size of the future coupon on these OFZs will also increase.
Relatively stable in the current situation are inflationary linkers: bonds, whose face value varies according to the consumer price index. Among the bonds of the Ministry of Finance there are 4 of these issues: series from 52001 to 52004. They are called OFZ-IN.
The presence of OFZ-PK and OFZ-IN in the portfolios mitigates the risks of changes in market interest rates. At the same time, there are also corporate bonds, the coupons of which are tied at different rates. The final yield on them is higher than that of OFZs with variable coupons. If this topic is interesting, write in the comments to the article and we will prepare a separate selection of such higher-yielding stocks.
Image on the index of the Moscow Stock Exchange until it changes. At this time, many participants are only on standby. It is necessary to wait for the breaking of the boundaries of the side corridor, which will indicate the further direction and goals. In particular, from above the range we follow the area of 2480-2500 p. Separate the market from rearrangement of lenses towards 2800 p. From below, the support zone is the area of 2370-2380 p. If it is exceeded, then the rollback targets will jump to 2320p.
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On the US stock market meanwhile, there has been a slight rebound ahead of tomorrow’s Fed meeting. It often happens that if the market approaches a meeting in a technical oversold state, a rebound follows before the Central Bank’s decision. Many participants take speculative short positions, recalling the popular “Don’t fight the Fed” rule. The S&P 500 gained 0.7% on Monday. However, there are still medium-term downside risks. For a detailed analysis of the current situation, cf. separate material.
cards in focus
• VK (+ 7.9%). Stocks have once again become the growth leaders among liquid stocks, continuing to update the highs. For three months, the growth was 110%. The high demand is supported by several long-term factors as well as positive business events. First of all, this is the departure of foreign IT companies. Against this background, the activity in the social network VK is actively growing. The state provides support to the entire IT industry. Additionally, investors see expanding business opportunities and acquisitions, including an asset swap with Yandex. Interest is also fueled by reports on the development of various new products, for example its own video game market VK Play, an analogue of Steam. Now the company is negotiating with developers to fill the game store.
At the moment, VK documents seem overheated. Region 560–595 rubles. it can act as a zone of technical resistance. At the same time, the long-term benchmark for stocks is 640 rubles.
• Fixed Price (+ 1.6%). published good financial report for the first half of 2022. Revenue information (+ 24% y / y) was known in advance from operating results, but net profit for the period decreased by 47.9%, to 5.1 billion rubles. The decline is due to foreign currency losses and higher tax charges. At the same time, gross profit increased 31.2% YoY to RUB 43.5 billion.
Fix Price has suspended the dividend policy but plans to resume payments as the block stabilizes. The wording is standard for all companies registered outside of Russia. The timing of the refund is not known. The appearance of any prerequisites for the return of dividends is a powerful engine of growth.
The current estimate of the Fix Price for multiples is still overvalued compared to the consumer sector. This is partly due to the high growth rates of the business, but the premium still seems excessive. Ceteris paribus, there are no expectations of outperforming the company’s earnings dynamics relative to the sector.
• Group positive (-0.2%). The company announced an SPO for 4% of the capital. However, this is not an ordinary additional problem, but the sale of a block of existing major shareholders. So there is no negative impact on the card from stock blurring. On the other hand, liquidity and free float on the stock exchange increased.
Furthermore, the Group has proposed a scheme, unique for our market, in which the participants in the placement will have the right to purchase 1 additional share in addition to the 4 shares purchased in SPO at the same price within 12 months (placement interval 1200-1320 rubles ). It turns out in the form of an option, when an investor can, on conditions favorable to him (if the price increases), buy more shares at a better price. If the market prices suddenly drop, the option may not be exercised.
On the occasion of the “Dialogue with the Issuer” meeting on the BCS Live channel, the company’s management confirmed the plans for further strong business growth, and also spoke in detail about the objectives and reasons for the SPO. You can view the edition here.
• MMC Norilsk Nickel (-1.3%). Stocks were among those that underperformed among blue chips, reacting negatively The Potanin interview. We haven’t seen any local growth drivers yet. The weakening of the ruble may provide support, but the USD / RUB rate is still stable around 60.
• At + (-4.4%). Again, the negative reaction from investors could be linked to Potanin’s comment that so far there has been no progress in talks with RUSAL regarding a possible merger. Consequently, the issue of disclosing the value of the parent company has so far taken a back seat. There aren’t many strong short-term growth engines yet, but in general, En + documents are more of a long-term story.
• Globaltrans (-5.6%). Agency published strong financial results expected. At the moment, takings were even actively growing, but by the end of the session, a wave of fixation passed. A 5% decline does not seem excessive given last Friday’s 10% increase. In addition, management indicated that due to the current restrictions, a solution on the dividend payment scheme that meets the interests of all shareholders has not yet been found. Dividends remain a priority for the company, but there are no guidelines on turnaround times to payout. At the same time, Globaltrans has temporarily suspended the repurchase program and will redeem the previously redeemed shares.
• PIK (-4.5%), Samolet (-4.1%), LSR (-2.7%). Equities remain under pressure momentarily after the CBR marks the end of the rate-cutting cycle. But yesterday there was also another negative factor. From 1 December 2022, the Supervisory Authority established a premium on the risk ratio for the loans provided for financing under the DDU agreement with an initial installment not exceeding 10%. The Central Bank notes that in recent months, in the primary market, construction companies have begun to actively advertise mortgage programs without down payment, even in installments. At the same time, historical data from banks show that borrowers applying for a loan with a low down payment are characterized by a higher level of credit risk.
• Ice Steam Rus (-21%). One of the third-tier securities most appreciated by speculators showed the worst result on the market. On Monday, a sharp drop was provided by news of the stock’s imminent removal from trading. Previously, since the end of August, the prices have risen 4 times, but now a gradual decline is likely in the absence of ideas.
• On 19 September, the Moscow Stock Exchange resumed evening trading of some mutual funds (13 in total). The trading platform plans to further expand the list of funds available during the evening session.
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Outdoor background
Today the Asian markets are trading in positive territory. Futures for the S&P 500 Index are down 0.15%, Brent Oil is up 0.2% and is close to the $ 92.2 level.
Quotes
Stock indices
ind. Moscow Stock Exchange (IMOEX2) 2436.04 (+ 0.04%)
RTS 1272.66 (-0.19%)
S&P 500 3899.89 (+ 0.69%)
Currency
USD / RUB 60.16 (-0.19%)
EUR / RUB 60.16 (+ 0.59%)
CNY / RUB 8.5559 (+ 0.15%)
Find out more
• They fall also on general growth
• S&P 500 Index. How much more to fall?
• Which bonds to choose after the Central Bank meeting
BCS world of investments
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