Page 73 - bne IntelliNews Country Report: Russia Dec17

(RUB9.8bn), the United Carriage Company (RUB1.9bn) and MMK ($223mn). But the biggest deal so far is the sale of the Swedish Telia 6.2% stake in Megafon for RUB22.5bn.
In the coming year analysts expect 5-7 IPO deals, according to Anna Vasilenko, managing director for the development of the primary market of the Moscow stock exchange, reports Vedomosti. The biggest event will be the expected privatization of a 25% minus 1 share of Sovkomflot, Russian Aquaculture SPO (about RUB3-4bn ), Moscow Credit Bank (about 14.5bn ).
In 2016 saw only SPOs: six issuers attracted RUB132.6bn. However, the largest transaction was the privatization of a 10.9% stake in Alrosa, which brought the budget RUB52.5bn.
Russia’s stock market indices continued their lethargic growth in October. The ruble-denominated Moscow Interbank Currency Exchange (MICEX) is now only down 3% YTD and may finish the year even, according to analysts. Not quite the 50%-plus the index returned in 2016, but this year has been about stabilisation and laying the ground work for a long slow recovery of the economy in 2018.
Its sister index the dollar-denominated Russia Trading System (RTS) could also end the year flat or even in the black, being down only 1% by the middle of November.
These results pale against returns in other emerging markets (EM), with Turkey being a top performer, having returned 41% as of the middle of November YTD and the other markets in the universe up in the teens or mid-20s. However, that is the nature of the Russian market: it is almost always the best performing market in the world – or the worst.
Trends on the market are starting to change. According to analysts, the steel story, the best performing sector this year, seems to be running out of steam due to high valuations and the seasonal slowdown in steel production due to a halt on construction in the frozen months.
Oil and gas names were more popular, rising on the back of oil prices that broke into the $60s due to problems in the Middle East and the promise of renewed production curbs at the Opec meeting in Vienna at the end of November. The ruble is also expected to strengthen, but as Chris Weafer argues in his bne column this week, “Six reasons Russia doesn't want a high oil price”, the relationship between oil and the ruble is broken and it will play a less prominent role in equity decisions than it used to.
In general commodity stocks did well with holdings of broker Aton's retail and high net worth clients in these stocks increasing by 11%. Metals in particular are being driven up by the growth of the electic car industry which creates a demand for platinum group metals. “Base metals such as nickel and copper received a tremendous boost in October, adding 24% and 8%, respectively,” reports Aton.
Amongst the individual stories Sistema was the standout stock in October and most heavily bought – somewhat surprising given it is still locked in mortal combat with state-owned oil major Rosneft, which has managed to get many of its major assets frozen by regional courts.
73 RUSSIA Country Report December 2017 www.intellinews.com