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Norvik Research 22.12.2016

22/12/2016 15:55

Global developments

Global stock markets are lower following declines in commodity prices. S&P 500 futures are 0.1% lower after the index lost 0.2% yesterday. Euro Stoxx 600 is 0.3% lower, Nikkei 225 is down 0.2%. The CSI 300 declined 0.1% today. The US dollar index is 0.1% lower. 10-year US Treasury yields are up 2 bps today at 2.55%. Gold is down 0.1%. China’s zinc output rose 7.7% YoY to a fresh high, reflecting higher demand.

Oil prices (Brent) are lower by 0.5% at $54.2/bbl. Iraq’s oil minister said at a meeting of the Organisation of Arab Petroleum Exporting Countries that most international oil companies working in the country (including the Kurdish region) have agreed to participate in implementation of the OPEC output cuts accord.

Russia and CIS area developments and market colour

Weekly inflation in Russia came out at 0.1% in line with the previous week’s reading. According to our estimates, in yearly terms, inflation declined from 5.6% YoY in the previous week to 5.5% YoY at present.

Russia’s central bank reported further declines in inflation expectations. According to the CBR’s estimates, expected inflation decreased from 5.5-5.6% in November to 5.2% in December. The tendency of inflation expectations to lag behind actual inflation performance is among the key factors behind the CBR’s cautious policy stance.

The rouble is 0.4% stronger today at 60.9 against the dollar. OFZ yields are 1-4 bps tighter today. Russia and Kazakhstan longer-term sovereign Eurobond yields are 1-2 and 6-7 bps lower today respectively. Azerbaijan-24 and Armenia-25 are 2 bps lower respectively. Ukraine sovereign bonds yields are 6-10 bps lower.

Corporate news

Vnesheconombank (VEB) will receive budget subsidies for RUB 150bn. VEB’s supervisory council approved a strategy for the next 5 years. The strategy implies RUB 150bn of subsidies in 2017 and no positive net income. VEB will also continue to use the National Wellbeing Fund’s resources (over RUB 300bn deposited at 0.25% p.a. for a 5-years period). In 2016 VEB received the same amount of money from government (RUB 150bn) and reported a net loss of RUB 153.8bn.

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