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UFS Investment Company - Daily Stock Market Review, Apr 26, 2013.

Market Situation

USA: good news from labor market;

Japan fails to overcome deflation;

UK managed to dodge triple-dip recession;

Putin: low tariff policy retained, banks need to share interest margin, oil companies a to reduce prices;

The news about chemical weapon application in Syria support oil quotes.

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Mechel: Vanino Port Infrastructure Will Be Financed with

RZD's Pension Funds (Positive);

Norilsk Nickel: Expectations Realized (Positive).

Key Statistics Today

Germany's Import Prices (monthly) (10:00);

France's Consumer Confidence (10:45);

US Quarterly GDP (16:30);

UoM Consumer Sentiment and Inflation Expectations (17:55).

Corporate Events Today

Tattelecom's AGM;

Closing of the register for Severstal's AGM;


IDGC of Center's board of directors meeting;

IDGC of the Urals' board of directors meeting;

Polyus Gold's board of directors meeting;

DIXY releases Q1 2013 operating results;

DIXY releases 2012 IFSR statements;

Lenenergo board of directors meeting;

Acron's board of directors meeting.

Market Situation

The number of initial unemployment claims in the US declined to 339,000 during the week ending on April 20, 2013, N[ETH]1/2[ETH][cedilla][ETH]*[ETH][cedilla][ETH]'[ETH]3/4NN, as follows from the report of the US Department of Labor. Analysts forecast 351,000. Continuing claims fell to 3 million precisely (against the estimated 3060,000).

Positive data supported US market combined with strong corporate reports. Labour market improvements signal possible

economic activity surge in April a it is a traditional spring burst this time occurring later than usual due to the longer winter. If seasonal increase in activity is confirmed, it can bolster commodities.

Japan's consumer price index declined again. Although core Tokyo CPI decelerated (-0.3% after -0.5% in the prior year), the national figure dropped 0.5% against 0.3% fall last year and expected -0.4%. In March CPI decreased 0.9% m/m, the previous change was -0.7%.

The Bank of Japan retained the key rate at the minimal level of 0.1%, and reiterated rhetoric of the QE necessity in order to overcome deflation. We expect disappointing data will give more room to monetary authorities, and Japan will stick to the policy on favour of asuper-cheap yena.

UK GDP increased 0.3% during the quarter against 0.3% decline in the previous quarter. The reading added 0.6% y/y,

twice exceeding the estimates. Investors in the UK and Europe as a whole perceived the results with immense enthusiasm, as they are primarily very important in psychological terms. UK managed to avert triple-dip recession a a third slump to negative GDP dynamics in the last 5 years. This issue was much speculated on in the UK media, and positive quarterly GDP dynamics dispelled investors' fears. Even so, it is yet premature to celebrate the victory, and no large-scale economic recovery is in question so far.

Yesterday's direct line with Russia's President brought no major surprises, but a number of statements impacted on the stock market. The President affirmed the course for slow tariff growth in the power sector, which cooled the rally in power stocks that were rebounding after a lengthy decline. In our view, the effect will be short-lived as the quotes already had the most negative scenario for the sector's regulation priced in.

While answering the questions of Russian citizens, the President hinted that banks aforget themselves with interest

marginsa, and measures are necessary to cut loan rates. Investors responded negatively in the stocks of VTB and

Sberbank, as development in this direction will put the banks' returns under pressure.

Rosneft was not spared either, accused of fuel market monopoly, which also creates increase regulation risks for the company.

Overall, we think investors will opt to wait out to see whether actual measures and restrictions take place, or the status quo is retained. Besides, long holidays do not favour opening of marginal positions.

Oil quotes continued to ascend and almost reached $103.50 per barrel of Brent. Along with technical factors and dollar in the morning, oil was supported by reports of Syria using chemical weapon against the rebels. The news escalated fears over the possible US military intervention in the conflict and again drove spread widening between Brent and WTI.

Technically, the target of $105.3 per barrel of Brent remains in place, which does not mean it will be reached without corrections. The level of $102 will still serve as a support. Firm oil will continue to help the Russian market.

The euro ventured another growth attempt after strong UK data yesterday, but the pair returned to the current descending channel, whose upper end near 1.3050 will still act as a resistance. In case of decline, support may be found at 1.30 and then at 1.2950 - the low end of the channel. US GDP data will be a crucial factor for the currency market today.

In the MICEX the ruble continued to strengthen against euro and dollar yesterday amid as oil was rising, while gold currency reserves reached a 7-month minimum with the help of the CBR. The dollar went down to the lower end of the channel, 31.10 rubles. Of oil price growth goes on, decline may continue to 31 rubles and further to 30.70, where the dollar should meet a strong support. If the channel resists, resistance levels in the rebound will stand at 31.20 and then at 31.33.

The euro, as we expected, touched 40.50 and may undergo a marginal correction today, to 40.70. Strong resistance levels are near 41 rubles per euro. Support will be found at 40.30 and 40 rubles.

Russian stock market finished mixed in its main indices. MICEX dropped 0.35% to 1372.20 points. RTSI closed 0.91% up at 1387.98 points.

Today we expect no marked dynamics in the first half of trading. 1380 points resisted yesterday; today the bulls may make another attempt to attack this level, yet if it fails, the MICEX Index may go back to 1350, then a 1320 points. However, without additional external drivers consolidation near the current levels is a more likely scenario. Trading dynamics can be influenced by US quarterly GDP data.



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Publication:Russian Banks and Brokers Reports
Geographic Code:4EUUK
Date:Apr 27, 2013
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