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Norvik Research 25.11.2016

25/11/2016 17:01

Global developments

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.

Corporate news

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.

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