The dollar’s recent run came to a halt today, after the index reached a multi-year high yesterday. The dollar eased 0.3% against a basket of currencies, having strengthened 3.8% since 8 November and 0.5% this week. US 10-year Treasury yields are up 3 bps from Wednesday’s close, to 2.38%. Asian stock markets continued to rally: CSI 300 is 0.9% higher while Nikkei 225 is up 0.3%. Euro Stoxx 600 is down 0.2%. The Turkish lira is little changed on the day, having fallen 1.4% yesterday to 3.45%, despite the unexpected interest rate hike. Gold is up 0.6% reversing yesterday’s losses.
Oil prices are lower as OPEC’s focus shifted to Iran and non-OPEC countries after Iraq expressed readiness to cut output. Russian Energy Minister Novak said that joining the OPEC deal would mean reducing the country’s output by 0.2-0.3 mn bbl/day. Brent prices are down 1.0% at $48.5/bbl.
Russia and CIS area developments and market colour
Russia’s real GDP is set to contract by 0.6-0.7% YoY in 2016, according to comments by first deputy PM Shuvalov. This range of projections is slightly worse than the latest official forecast of -0.6%, reflected in the 2017 budget. According to MinEcon’s estimates, real GDP showed zero growth in October in seasonally-adjusted terms, following a 0.2% contraction in September. In the first 10 months of 2016, real GDP fell 0.7% YoY. The main drag on growth in October came from retail trade (-0.5% MoM SA) while positive contributions were made by construction (1.6% MoM SA), manufacturing (0.5%) and agriculture (0.1%).
In other comments this morning, Shuvalov said that the new fiscal rule will be agreed in 2018, contrary to earlier expectations for this to happen next year.
The rouble is 0.2% stronger at 64.5 against the dollar. OFZ yields are little changed today. Russia and Kazakhstan longer-term sovereign Eurobond yields are 0-1 and 2-3 bps wider today. Ukraine Eurobond yields are 3-4 bps wider today. Azerbaijan-24 and Armenia-25 are 1 and 2 bps tighter.
Gazpromneft published favourable Q3 IFRS data. Sales rose 11.2% QoQ to RUB 450.2bn, adjusted EBITDA was up 13.2% QoQ, net profit increased 16.8% QoQ to RUB 57.1bn. In Q3 hydrocarbon output rose 8.1% YoY to 63.5 mn tonnes. The company plans to keep the current level of capital expenditures (at about RUB 360bn) and dividends at 25% from net income in 2017.
For more information on the research, please click here.
Norvik Banka Research
+44 207 259 8854
+371 6701 1561
This report is prepared by Norvik Banka UK Limited, of 46-48 Grosvenor Gardens, London, SW1W 0EB, United Kingdom (hereinafter referred to as the Company) as a marketing communication for information purposes only. Neither the information nor any opinion contained in this report (notwithstanding the source) is intended to be, or should be construed as an offer, a recommendation, an advice or an invitation to make an offer, to buy or sell any financial instrument. Information contained in this report constitutes neither investment nor tax advice and it does not take into account the specific investment objectives, risk appetite and financial situation of anyone who may receive this report. Investors should seek their own advice regarding the appropriateness of investing in any financial instrument discussed in this report and carefully evaluate the risks and eventual losses that are related to the investment services and its compliance with their investment goals.
Investors should note that any income derived from investments in financial instruments may fluctuate and that the price or value of securities and investments may rise or fall. Accordingly, investors may lose their investment or receive back less than originally invested. Past performance and income is not a guide to future performance and income. Foreign currency exchange rates may adversely affect the value, price or income of any security or related investment mentioned in this report. Investing in the Russian or CIS economies and securities involves a high degree of risk and requires appropriate knowledge and experience.
The information contained in this report have been obtained from such public sources what are believed to be reliable, but no representation or warranty is made by the Company with regard to accuracy. Therefore the information contained herein is subject to change without prior notice.
This report should not be viewed as the only source of information, and neither the Company, nor the companies within the NORVIK group and/or any affiliates or employees thereof accept any responsibility or liability whatsoever for any direct or indirect damage arising out of or in any way connected with the use of information contained herein, nor for its authenticity.
This report may not be distributed, copied, reproduced or changed without prior written consent from the Company. Further information, which for the avoidance of doubt cannot be treated as the recommendations and/or advice either, may be obtained from the Company upon request.
This report has not been prepared on the basis of the requirements of regulatory provisions promoting independence of investment research and is not subject to the prohibition from making transactions before disseminating investment research.
Norvik Banka Research is a Trading Name of Norvik Banka UK Ltd, which is Authorised and Regulated by the Financial Conduct Authority, FRN: 681329. Registered in England and Wales with number 08940522. Registered Office: 46/48 Grosvenor Gardens 1st Floor, London, SW1W 0EB.
The information contained in this communication from the sender is confidential. It is intended solely for use by the recipient and others authorized to receive it. If you are not the recipient, you are hereby notified that any disclosure, copying, distribution or taking action in relation of the contents of this information is strictly prohibited and may be unlawful.
This email has been scanned for viruses and malware, and may have been automatically archived by Mimecast Ltd, an innovator in Software as a Service (SaaS) for business. Providing a safer and more useful place for your human generated data. Specializing in; Security, archiving and compliance. To find out more Click Here.