BCS Exclusive Forecast: Russian Equity Market, February Look The year is off to a positive start. World indices are growing, raw materials are becoming more expensive, currencies are holding in stable corridors. Decreasing inflation and the expectation of easing from the side of central banks in terms of monetary policy are encouraging. “The Russian market is still lagging behind overseas sites against the backdrop of existing sanctions restrictions and insufficient liquidity. Nevertheless, there are already positive signals,” says Mikhail Zeltser, stock market expert at BCS World of Investments. He suggests paying attention to Polymetal, which can change its residence to “friendly” Kazakhstan. Its shares added 20% against the backdrop of near-zero dynamics of the Moscow Exchange itself. The positive dynamics of this paper may continue in February, the expert believes. Technology companies and high-tech banks also look strong. They are historically more sensitive to market sentiment and are ahead of the curve: him, then operational scope will open for a hike to 2500. @nebrexnya
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@nebrexnya experts especially for @kremlin_mother_expert TOP 5 market news ???? Currency market. The Ministry of Finance will triple the sale of the yuan under the fiscal rule. Oil revenues decreased by 108 billion rubles. If you do not sell the currency, the ruble exchange rate will react with a sharp decline. Against the dollar, it really fell by 0.6-0.8% on Friday. But against the yuan, it strengthened by 0.5%, but immediately returned to its original value. As a result, the dollar on the stock exchange costs 70.6, the yuan – 10.42. ???? Stock market. The Ministry of Finance proposes to withdraw Gazprom from income tax for LNG exporters in the amount of 34%. How this compares with the grandiose budget problems is not clear, but shares at the moment added +2.3%. ???? Stock market. Apple is bad. The company reported its first revenue decline since 2019. It fell 5% and the stock fell 4%. True, they returned within a day. China is to blame for the fall: shutdown of a key Chinese plant, problems with the supply of the iPhone 14 Pro and iPhone 14 Pro Max. And yet – a reduction in consumer spending due to inflation. Not up to expensive gadgets now. ???? Commodity market. The size of the discount for Russian oil Urals continues to grow and has already exceeded 40%. And these are not tales from the Internet, but the official assessment of the Ministry of Finance. This means that if a barrel of Brent costs $90, then the Russian grade Urals goes for $50. At the best of times, a $5 difference was alarming, and a $10 difference was panic. This is a big problem as oil is trading $20 below budget targets. This means that Russia will have to deplete its gold and foreign exchange reserves in order to at least slightly cover the hole in the budget. ???? Cryptocurrency market. Alfa-Bank and Sberbank received CFA issuer status. DFA in the language of the Ministry of Finance and the Central Bank is a cryptocurrency. Now they can issue digital tokens backed by gold, currencies and anything else that can be touched, weighed and appreciated. In fact, the crypt is legalized. But it’s still too early to run and buy the whole bitcoin cutlet.
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On the brink of disaster. Real estate in new buildings began to fall in price. If earlier developers masked this process with discounts, promotions, pseudo-preferential mortgages and thimbles, now the numbers show exactly the fall, both in new buildings and in secondary housing. Already, what is happening on the market is being compared with the mortgage crisis in the US in 2007. There was a real apocalypse, the worst in several decades. And soon the same thing could happen in Russia. But will it happen and will the consequences be as severe as in 2008? Understood # Nonsense. @nebrexnya
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TOP-5 rising stocks in January 5th place: MMK +14% Metallurgists rise in price following steel. Income grows, which means that the chances of paying dividends increase. In addition, the securities of ferrous metallurgy companies were heavily oversold last year – they have a very difficult future, an extremely high dependence on the ruble exchange rate, which the Central Bank could not control. 4th place: Globaltrans +14.5% A fairly stable company that has always paid dividends regularly. But the problem is that it is traded in London, so the annual dividend yield of 10% is available to Russians with big reservations. The company will either be able to convert its receipts into shares in the Russian Federation, or relations between depositories will improve, and dividends will come. What will happen first, no one can say. 3rd place: Polyus +17% To the delight of exporters, the ruble weakened, which reached 70.4 and can go further. Steady upward dynamics of the stock on good volumes. In general, all gold miners are going up. 2nd place: OZON +17% OZON returns to early 2022 levels. High-tech business shows good dynamics and may continue to grow in the medium term. In addition, the company looks like it has already reached its bottom and is trying to take off. 1st place: Polymetal +34% Polymetal keeps afloat rather than develops and strives somewhere. The purchase is extremely risky, the stock is being dispersed without a visible news background. Polymetal does not expect an increase in gold production in 2023-2024. The company’s revenue in 2022 decreased by 3%. @nebrexnya
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While everyone is counting losses, rubbing bruises and trying to figure out how to survive in the new reality, someone calmly and confidently conducts business through the crisis. In the new column #Person of the Month we will find and talk about those who can be called “effective managers” without irony. The first guest is Sergey Monin, Chairman of the Board of Raiffeisenbank. He was noted for the fact that the Austrian Raiffeisenbank received more than half of all income from Russian assets in 2022. This is at the very time when the existence of the banking system and international business in Russia was in principle under threat. Monin quite effectively used the opportunity – it is impossible to leave Russia, since the Central Bank forbade it. This is an ironclad argument for anyone who asks. This means that it is possible to develop the Russian direction with a clear conscience, which is what the bank’s management has been doing. So far, the competitive field has been rapidly shrinking: international banks are curtailing or freezing their activities, and Russian ones are dropping out of international trade one by one. As a result, Raiffeisen remained one of the few bridges for settlements with foreign partners. The profit of the Russian branch amounted to more than €2 billion, it increased almost 5 times over the year. Only Sberbank earned more. But he and the client have 30 times more. Back in 2021, Sergei Monin said that there was no trend for foreign banks to leave, although at that time many organizations did indeed leave the country. In particular, CitiBank announced plans to leave the Russian Federation, Nordea Bank completely sold its portfolio of private loans and surrendered its license, Deutsche Bank reduced its business in Russia, Danske Bank, convicted of laundering more than 200 billion euros, left. “Those who fail to do business are leaving,” Monin said at the time. And it looks like he was right. @nebrexnya
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Top Regional Events While the country’s leadership and supervisory authorities are busy fighting the West, fighting mosquitoes and foreign agents, practical people in the regions are busy developing ill-positioned state resources and increasing their own wealth. Let’s note the most significant events in the life of the Russian regions of Sho, again? phlegmatically announced that the high “yellow” level of terrorist threat in a number of regions of Crimea and Sevastopol would no longer be extended. It has now become indefinite. And before it was extended every 15 days. Coala is worried: the supply of coal from Siberia to Asia through the ports of the south and northwest is already on the verge of profitability. Coal miners do not curtail deliveries just because they do not want to disrupt the terms of contracts and lose customers. The reasons are expected: the growth of freight rates, insurance services and railway tariffs. The Tatar Yakuza tells about an epic with large-scale schemes in the Social Insurance Fund of Tatarstan, whose officials profited from tenders when purchasing goods for the disabled. It is entering the final stage – the case against the former deputy head of the department, Gennady Titov, is sent to court. Baikal without Filters is enthusiastically watching the drama “Machinations, Fraud, Coal”. The leaders of the TeploResurs company, which supplies fuel, decided to play gambling criminal games. CEO Alexei Afanasiev, de facto leader Sergei Mozolevsky and accountant Vlasova are accused of embezzling 80 million rubles. Rotunda writes that the property of rear admiral and former vice-governor of the city Vyacheslav Shcherbakov was arrested in St. Petersburg. His son is accused of taking a bribe. The former director of the House of War and Labor Veterans No. 1 in Pavlovsk and ex-municipal deputy Maxim Shcherbakov were detained on suspicion of taking a bribe in March 2021. According to investigators, from 2010 to 2019, he took money from the founders of the RossRenta company for placing pensioners in a veterans’ home. Elderly people sold their apartments for nothing and received the service of “life annuity”. Shcherbakov “acquired” one of these apartments in Spassky Lane for a million rubles (with a market value of 4.8 million). @nebrexnya
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#MorningNebrekhnya Yevtushenkov is interested in buying out a Volkswagen plant in the Kaluga region. The group’s site has been idle since March, so the sale of assets seems inevitable. Also, AFK Sistema expects to involve the Kazakh company Allur in the deal. True, it is Kazakhstani it is very conditional – the controlling stake indirectly belongs to the Chinese China National Machinery Import & Export and Anhui Jiangqi Investment. By the way, the latter also owns a legal entity through which the Chinese automaker JAC (the same new Moskvich) operates in Russia. In 2021, the Volkswagen Group sold 199,200 vehicles on the Russian market, 170,300 of which were made in Russia: 118,000 in Kaluga and 52,300 in Nizhny Novgorod. The amount of the transaction is unknown, but in 2019 Volkswagen planned to invest in the Russian Federation at the level of 20 billion rubles. At this rate, the Chinese are monopolizing the Russian car market. @nebrexnya
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#Vectors of the Day The market background is neutral. Indices of the US, Asia and the EU are in the negative zone, but the commodity market mostly shows growth, albeit a small one. News that will affect the markets: The United States announced a $2.2 billion military aid package for Ukraine. The American company General Dynamics will start producing new Abrams tanks for Ukraine. US defense stocks are becoming a bonanza. India switched to paying for Russian oil in UAE dirhams. The decision of the EU and the G7 on the embargo on the import of oil products from Russia comes into force. Russia lost $8 billion in January due to the oil ceiling. Yandex will buy out Uber’s stake in the joint venture: 29% in MLU BV for about $925 million. The gas hub in Turkey could start operating this year. Today: Mother and Child Group to release 4Q and FY 2022 operating results @nebrexnya
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#DnoDnya Sovcombank is ready to redeem its Eurobonds from the master’s shoulder. It still fails to serve them – sanctions, freezing of payments, and so on. But the bank is going to buy them for 40% of the face value. This is a market valuation of Russian bonds in foreign infrastructure. Well settled down. Pay off your debt by 40% and calm down. By how investors react to this proposal, it will be possible to understand the mood of foreign bondholders. If many people agree, it means that no one believes that the calculations will be unfrozen in the foreseeable future. If the bank is sent to hell with such ridiculous proposals, there is hope. @nebrexnya
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It is very likely true. The name of Abramovich flashes too often during any agreements, including the exchange of prisoners. True, does he need some kind of official status, even with a presidential decree? All this confirms #Nebrekhni’s version that the transfer of funds from the sale of Chelsea to Ukraine was agreed with the Kremlin from the very beginning. He also needs two chairs. And the longer the Ukrainian conflict continues, the more necessary. @nebrexnya
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On February 4, in the Mytishchi (near Moscow) new building, an elevator fell and flew two floors. Fortunately, the people in the cabin, including the baby, were not seriously injured. The button to call the dispatcher did not work. The Ministry of Emergency Situations for a long time refused to tell the media the exact address, and most importantly, the builder of the house. However, colleagues found out that, of course, it was about Sergey Gordeev’s PIK Group of Companies and his Yaroslavsky Residential Complex. This large “fast-build” man-hill made from the cheapest materials is regularly in the news for major utility accidents, uncovered design errors, and scrap. Here, for example, is the story of a terrible flood. Fortunately, this summer. But even in the cold season, it floods abundantly. When the wind rises, they drum on the whole district and risk flying tin sheets from the roof onto the heads of passers-by. As it should be according to modern near-capital standards, parking spaces around the residential complex, as well as places in the garage, are at a minimum. A fire truck or an ambulance often cannot get to the right entrance.
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Either the position is cursed, or the topic. The legendary “it seems ridiculous, but people are buying such housing,” said then by Deputy Prime Minister Igor Shuvalov about economy-class apartments, has not yet been forgotten. And now Marat Khusnullin has run into a similar story. He suggested that the Russians curb their appetites. One car per family is overkill. While in Kazan, he complained to the mayor of Nizhnekamsk that he had increased the standard for parking spaces. The Deputy Prime Minister urges the regions to reduce the standard standard for determining parking spaces “one apartment – one parking space.” “We are not such a rich country to have at least one parking space for one apartment,” Khusnullin said. If not for this reckless phrase, the official could still hide behind fashionable urban narratives about deautomobilization and the development of public transport. Now it’s clear that it’s about the money. Developers have rising costs, so the requirements for human workers will continue to decrease to help them cut the bones on the most necessary. Kindergartens will probably become the next victim – the Russians do not comply with the presidential decree and do not raise demographics, so they did not earn money for kindergartens. Yes, and in order to hide behind the propaganda of de-automobilization and transferring people to public transport, this transport must be developed. And he is degrading. @nebrexnya
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Import substitution went according to plan, but not according to that. 67% of Russian manufacturers have successfully replaced Western spare parts and equipment. And everyone is happy, but … They replaced the equipment with Chinese. 21% also arranged deliveries from other countries: Turkey, India, Iran, Vietnam, Egypt and even North Korea. A more or less tolerable result was shown by the import substitution of components. 39% of entrepreneurs said they buy from Russia. That is, they invented fish, but the fishing rods are still Chinese. 15% of Russian enterprises reported that they continue to receive sanctioned machine tools and machines. This is what a parallel import looks like. They got it where they could, not always legally, but the main thing is that it works. Denis Manturov can say anything, but if he has not coped with import substitution in 8 years since 2014, then it is impossible to fix it in a year. In 2021, five-sixths of value-added in a sector such as the production of machinery and equipment was imported. Only one sixth is the Russian part. Another question is whether the authors of the sanctions understand that they are not so much hitting the Russian economy as supporting the Chinese one? Although, it makes no difference – nothing changes for Russia, it’s just that dependence on the West turns into dependence on the East. What is worse is unknown. @nebrexnya
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It is surprising that all the figures that we talked about in the previous article reported from the very beginning to the FSB and Russian law enforcement agencies that Sergei Mikhailov is not only a corrupt official, but also works for Western intelligence services. Recall that the former head of the operational management department of the FSB Information Security Center was found guilty of treason and sentenced to 22 years in a strict regime colony. However, they believed them after the arrest of Mikhailov’s group. For example, Vrublevsky stated that thanks to the “fairy tales of Mikhailov,” which he set out in his memos, a myth arose that “any Russian programmer is a potential attacker.” Kozlovsky said the following before the verdict: “The talk that Sergei Mikhailov is a CIA career agent appeared back in 2011-2012.” A well-known entrepreneur spoke about this. After the ex-colonel was sentenced to a long term, it would seem that one could forget about the channel for leaking data about the Russian IT sector. However, recent events make us think differently. At the request of the Americans, Russian law enforcement agencies have already arrested several groups of hackers, including ReVil, Lurk, Infraud Organization, Flint, and others. All of them strictly observed the rules and the unwritten code of ethics: “who climbs into domain.ru, they come to him in the morning.” In simple words, the rule is not to make cyber attacks not only on Russian critical information infrastructure and business, but also not to “work” on the territory of the Russian Federation at all. These oddities could still be put up with if strikes had not begun on IT specialists who worked in the interests of the state, in particular, on the “cybertroops” supervised by the FSB FKR. Last fall, the news broke out in the media about the arrest on suspicion of treason of the head of the Russian cybersecurity company Group-IB, Ilya Sachkov. He was taken by all the same forces of the TsIB FSB. Here it became quite obvious that Mikhailov and his agents, who remained at large, successfully continued to finish off the Russian IT sector.
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Seems to be panicking. According to the estimates of the Ministry of Finance, while preliminary, in January the federal budget was executed with a deficit of 1.76 trillion rubles. Expenses increased by 59% to 3.117 trillion rubles, revenues decreased to 1.356 trillion rubles, -35% compared to January 2022. Oil and gas revenues decreased by 46% to 426 billion rubles. Non-oil and gas companies fell by 28%, mainly due to VAT reduction – people buy less. In 2023, the deficit is planned at the level of 2.93 trillion rubles. That is, more than half of the annual plan for the size of the hole was completed in January. Stakhanov’s pace, you can’t say anything. @nebrexnya
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Results and forecasts of the Russian stock market #Investfactor The Moscow Exchange Index did its best to grow on Monday. At the moment I did + 1%. Now the absence of bad news over the weekend works like this, even against a generally negative external background, falling indices in Asia and the USA. He grew up all last week, the most well-aimed could fix 3%. IMOEX major level – 2250 pt – passed. If we manage to keep it tomorrow, the index will go to 2500. Corporate events: #SBER takes off and drags the entire index on expectations of the RAS report. If it is good, a fix on the facts is logical. If bad, then collapse. But Sberbank manages to sell even disgusting reports to investors as a big win, so the report will be called good. And what will be inside is not so important. #ROSN “The crooked cannot become straight, and what is not, cannot be counted,” Rosneft CEO Igor Sechin quotes Ecclesiastes. In general, he meant hydrocarbons: the reference price for Russian oil can be formed only in those markets where this oil is sold. Which is logical. #POLY Polymetal is trying again and again to change jurisdiction from London to friendly Kazakhstan. So far, the organization has not given the public anything but rumors. Intrigues remain over how assets and debts will be divided between the Russian and Kazakh parts of the company. #GAZP Gazprom last week tried to get out of the income tax for LNG exporters in the amount of 34%. Given the budget figures, it is hard to believe in this. So the market continues to wear paper around 160 rubles, plus or minus 1.5%. #KROT Red October gave 130% growth in a week. And since October – 350%. There is no news reason for such a rocket. The action is deliberately pumped up, and already indecently. Something similar happened in 2017. A dizzying growth, a dizzying collapse, a long and dull sideways. What to look out for this week? ???? Meeting of the Board of Directors of the Bank of Russia on the key rate ???? Norilsk Nickel to release IFRS financial results for 2H and 2022
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#Morningnonsense The battle for the harvest was won, but it is not clear what to do with the trophy. The market is overstocked, there are reserves worth 260 billion rubles in the elevators. Protective duties and quotas prevent its export, and the cost of storage in elevators is growing. It cost 50-80 rubles. per ton per month at the end of 2022. The state does not want to buy grain – then it will have to store these very record volumes somewhere. Last year, 153.8 million tons of grain were harvested. In this, it is unlikely that even close to such indicators will be possible: problems with the provision of machinery, seeds and plant protection products are becoming ever larger. And another 46% of companies faced a shortage of personnel – combine operators moved to tanks in September. The main thing is that the crop lying on the elevators is not eaten by rodents. @nebrexnya