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Norvik Research 17.07.2017

17/07/2017 16:26

Global developments

Zinc and iron prices rose amid better than expected data on China’s economy. China’s economy grew 6.9% YoY in Q2 in line with Q1 reading higher than consensus forecast of 6.8% YoY. Zinc prices rose 1.4% and iron ore added 2.4%. Bloomberg commodity index is 0.3% higher today. Futures on S&P 500 are 0.1% higher after the index rose 0.5% on Friday. Euro Stoxx 600 is up 0.1% today. CSI 300 is 1.0% lower. The dollar is flat. US 10Y yields are 1 bp lower at 2.32%.

Oil prices are slightly up supported by China’s economic growth data. Baker Hughes reported that the number of active rotary rigs in the US increased by 2 to 765 in the previous week. Brent prices are slightly higher today at $48.9/bbl.

Russia and CIS area developments and market colour

The rouble is 0.5% weaker against the dollar at 59.3. OFZ yields are without significant changes today. Russia’s and Kazakhstan’s longer term sovereign yields are 1 and 3-4 bps tighter today.

Corporate news

Taxi services aggregators, Yandex.Taxi and Uber, have signed an agreement to merge their businesses in Russia and several CIS markets. The merged company will be valued at $3.7 billion, and the market share in Russia will reach around 80%. Yandex will have a controlling stake of 59.3%, Uber will have 36.6%, and the workers will get the remaining 4.1%. After the merger, both apps will be available to customers. The merged company will be more attractive to foreign investors, while Yandex could enter new international markets.

The market reaction was very positive. Shares of Yandex increased 17% to $31.6 per share, the maximum price level since 2014. An absolute maximum was reached at the start of 2014 at $45.4 per share.

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