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ATON - Daily Dashboard, Markets at a Glance - Oct 5, 2011.


Strategy and Economics

- Inflation Slows to 7.2% YoY in September, in Line with Consensus


- VTB Hosts Investor Day


- RusHydro 1H11 IFRS Results: Neutral

Special Situations and Small Caps

- HMS Group Reports 1H11 IFRS Results in Line with Our Estimates

Telecoms and Media

- CTC Media: Weak 3Q11 Ratings and Pepsi's Advertising Cancellation

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REPORT RELEASE. Today (5 Oct) we released RUSSIAN GOLD MINERS: Short Gold, Long Gold Miners. We see a

discrepancy in the high level of gold prices and the low valuation of gold miners, just as we did in autumn 2008 when the XAU Index/gold price ratio hit its historic high of 9x. Last time, the ratio then sharply declined on the back of rising gold prices and the valuation of gold miners finally caught up with the gold price. We revise our target prices for Russian gold mining companies on the back of our new price assumptions for precious metals. We also increased our equity risk premium by 350 bpts to account for a higher risk environment. We remove Polyus Gold from our coverage and replace it with Polyus Gold International, as the former's low free float will likely reduce its investor appeal, while the latter could soon obtain a primary LSE listing. We assign Polyus Gold International a HOLD rating and target price of $3.8/share. We reduce our TP for Polymetal to $17.9/GDR (from $19.8) but raise our rating to BUY. We slightly cut our TP for Highland Gold to $3.4 from $3.5 but confirm our BUY rating. We drop our TP for Petropavlovsk to $15.1/share (vs $17.8) with the rating remains a BUY. Finally, we revise our target price for High River Gold to $1.6 (up from $1.3) with its rating raised to BUY. Our top pick is still Highland Gold. Click here to view the full report.



Russian indices declined significantly yesterday: MICEX lost 5.7% and the RTS slipped 5.2%, while the RDX suffered the worst loss, falling 7.6%. The key underperformers were Cherkizovo (18.1%), (15.1%), Bank Vozrozhdenie (14.3%) and Raspadskaya (13.0%), while Mechel (0.7%), HMS Group (0.4%) and Polyus Gold (0.4%) managed to rise. On the commodities front Brent futures declined 1.9%, gold dipped 2.1% and copper and lead retreated more than 2.5%. This morning Brent has rebounded 1.8% to $101.6/bbl, while gold and silver are little changed. The rouble is continuing to depreciate, now trading at RUB32.72/$. On the economic front, net private capital outflows from Russia amounted to $18.7bn in 3Q11, Vedomosti writes today, citing preliminary balance of payments data. Capital flight reached $21.4bn in 1Q11 and $9.2bn in 2Q11. The 3Q11 month-on-month increase may have been driven by greater political uncertainty ahead of the Dec 2011 and Mar 2012 elections, the sharp weakening of the rouble since the start of August, and European banks removing funds from Russia to support local operations amid the European debt crisis.


Yesterday was rather a dramatic day. The Hang Seng lost 4.4%, while the Euro Stoxx declined 2.2%. The S&P 500 was down during the day and rebounded (up 2.2%) only after Federal Reserve Chairman Ben Bernanke suggested that the Fed would take measures to spur growth. Financials drove the markets, pushing the US up (+4.1%) and dragging Europe down (3.8%). Moody's slashed Italy's credit rating by three notches and warned that further downgrades are possible. This morning the Nikkei is down, while the Hang Seng is closed.


S&P 500. Bestperforming sectors: Financials, Basic MaterialsI3/4 Worstperforming sectors: Utilities, Telecommunications


MSCI EM lost 2.5% yesterday with Russia the main underperformer (5.7%) while MSCI World closed flat. The main

concerns were a worsening of Europe's debt crisis along with decreasing commodity prices, which sent the EM benchmark to a t w oyear low. This morning the Sensex is up 0.3%, KOSPI has declined 2.2%, while China is remains closed for a holiday.



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Publication:Russian Banks and Brokers Reports
Date:Oct 5, 2011
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