Drukāt |

Norvik Research 06.09.2016

06/09/2016 16:59

Global developments

Risk appetite persists ahead of ECB’s meeting on Thursday. S&P futures are rising 0.1%. Euro Stoxx 600 is up 0.1% today, to the highest level since January. The dollar index is 0.2% weaker today. Yields on 10-year US Treasuries rose 1 bps to 1.61%. Nikkei 225 is up 0.3%, China’s CSI 300 rose 0.7%, FTSE 100 is down 0.2% as GBP appreciated a further 0.2%.

Oil prices continued to slide following yesterday’s disappointment with the lack of details on the Russian-Saudi cooperation. Brent prices are down 0.6% today at $47.3/bbl, following yesterday’s 1.7% increase.

Russia and CIS area developments and market colour

Russia’s inflation in August declined to 6.9% YoY, from 7.2% in July, in line with weekly data and market expectations. Official core inflation fell to 7.0% YoY from 7.4% in July. Food price inflation was unchanged at 6.5% YoY while non-food goods inflation fell to 8.1% from 8.4%. The drop in headline inflation has widened its gap with the key rate (10.5%) to above 350 bps. With falling inflation and inflation expectations, and a broadly stable exchange rate, we see a strong case for a policy rate cut at the 16 September meeting.

The Reserve Fund reported a RUB 390bn drawdown for budget financing purposes in August. Similar monthly drawdowns occurred in March-May 2016. The stock of Reserve Fund totaled $32.2bn as of end-August.

Russia’s Ministry of Finance is seeking to extend the 50% dividend requirement for state-controlled companies. According to a draft decree prepared by Minfin, state companies should direct 50% of their net income according to IFRS to dividends in future (initially this requirement was introduced for 2016 as a temporary measure). The ministry estimated additional revenue for the budget at RUB 200-250 bn per year in 2017-2019. If implemented, the move would help reduce fiscal pressures (and support OFZ prices) while being credit- negative the largest oil and gas companies, including Gazprom and Rosneft, as these companies will have to increase borrowings to finance capex programs.

A date for the IMF Board meeting for Ukraine has been set, according to comments by Finance Minister Daniluyk. However, the official refrained from providing further details. Earlier an IMF spokesman said that Ukraine’s program may be reviewed in the second half of September. Confirmation of the next tranche would unlock further official assistance and should support the hrivnya (UAH depreciated by 8% against USD since early August).

The rouble is 0.2% stronger today at 64.8 against the dollar after a 0.3% move yesterday. OFZ yields tightened 1-2 bp yesterday in inactive trading.

For more information on the research, please click here.

Norvik Banka Research
+44 207 259 8854

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.

Pēdējās ziņas