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Norvik Research 13.10.2016

13/10/2016 15:03

Global developments

Stock markets are lower after publication of poor Chinese trade data. Export USD values fell 10.0% YoY in September (consensus: - 3.3% YoY), imports declined 1.9% YoY (versus 0.6% YoY growth). Nikkei 225 fell 0.3%, CSI 300 is flat, Stoxx 600 declined 0.8%. S&P futures are down 0.6% after the index closed 0.1% higher yesterday. 10-year US treasury yields are 3 bps lower at 1.74% after yesterday’s FOMC minutes confirmed deep divisions among its members. The dollar index is lower 0.2% today, after a 0.3% increase yesterday.

Oil prices fell on higher US inventories. The API report showed oil inventories up 2.7 mn bbl in the previous week. Brent prices declined 0.1% to $51.7/bbl.

Russia and CIS area developments and market colour

President Putin told the VTB forum yesterday that Russia’s financial market would not be affected by a “potential temporary buyback of Rosneft shares and their subsequent re-sale”. This was an indication that a decision about the form the other large transaction involving Rosneft may have been made. Earlier today CBR Governor Nabiullina said that Rosneft has significant rouble assets and thus its possible acquisition of its own shares should not affect the rouble.

Russia’s goods trade data for August were worse than expected, mainly due to a surge in imports. The trade surplus in August totaled $4.9bn compared to consensus forecast of $6.8bn. USD export values declined 7.2% YoY in August, while import values rose 13.0% YoY after -4.1% YoY in July. The 12-month rolling trade surplus fell to $95.5bn in August from $99.5bn in July.

Russia’s inflation was steady in the week to 10 October at 0.1% WoW and is estimated to have stayed at 6.4% YoY.

The rouble is 0.2% weaker at 63.2 against the dollar today. Longer-dated OFZ yields are 3-5 bps wider today after similar moves yesterday. Russia and Kazakhstan sovereigns are 4-5 bps and 5-9 bps wider today, respectively. Ukraine-19, Azerbaijan-25 are Armenia-24 are all 1-2 bps wider.

Corporate news

Severstal has reported strong production results for Q3 2016. Output of hot metal increased by 8% QoQ and 3% YoY to 2.39 mn t, while production of crude steel was up 6% QoQ and 3% YoY to 2.98 mn t. The strong QoQ growth reflects low base effects (a result of maintenance works at Cherepovets Steel Mill in Q2 2016). Sales of steel products fell 5% QoQ to 2.65 mn t affected by reduced activity of local traders and soft domestic steel demand. The share of high value-added products declined to 42% from 43% in Q2. Severnaya mine will be sealed off following the accident in February 2016. As a result this accident, output of coal concentrate declined by 38% in Q3 2016 from the peak level achieved in Q4 2015.

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