Page 16 - bne Magazine Apri20

16 I Companies & Markets bne April 2020
King of the Castle market capitalisation $mn
Jan 20
Mar 13
loss
%d iff
Gazprom
96,784
52,312
44,472
45.9
LUKOIL
77,512
42,187
35,325
45.6
Novatek
60,969
32,124
28,845
47.3
Rosneft
83,260
39,692
43,568
52.3
Sberbank
93,510
51,249
42,261
45.2
Source: Alfa Bank, MOEX
the same period. Indeed all Russia’s blue chip names saw prices fall by more than 45%, which is worse than the market’s overall decline of 39.9% over the same period.
The big question is when will the market hit bottom? As the chart above shows these big selloffs are always followed by a big bounce back. But timing is everything.
As bne IntelliNews reported, some bottom fishers appeared on the market on March 3 as Russian stocks are clearly extremely cheap again. The buying was concentrated in the utilities names, where the investment story remains attractive.
However, the market has stepped down again in the last two days. In the previous sell-off in 2014 at its lowest point the
Ukraine shut out of international market by surging Eurobond yields
Ben Aris in Berlin
The yield on Ukraine's 2028 dollar denominated Eurobonds surged 147bps to 10.91% on March 12, effectively shutting the country out of the international capital markets as it faces more than $5bn of debt repayments this year.
“Effectively, Ukraine is now excluded from international finance. It took President Zelenskiy one day (March 4) to undo the macroeconomic stabilisation pursued since 2014. Now Ukraine needs the IMF,” Anders Aslund, a Swedish economist and a senior fellow at the Atlantic Council, said in a tweet.
www.bne.eu
RTS was trading at 667, but it quickly recovered to around 850 before slowly starting a five-year-long recovery. With the RTS closing at 966 on March 12 the market is clearly close to its bottom again, but more shocks could send it down briefly into the 600s again like last time.
Alfa bank was upbeat and said it sees some signs of relief at these levels. As bne IntelliNews reported there has been a wave of top Russian managers and owners buying stocks in their own companies and some companies are announcing they
will launch new buyback programmes to support their share prices. Alfa Bank reports some speculators are also getting into the market again at these prices, but advised caution.
“Friday the 13th provides a fitting end to a terrible week for financial markets. In saying that, we see signs of relief this morning for Russian equities after Thursday’s collapse, with US futures pointing 1.6% higher and oil prices rebounding. The ruble has also strengthened about 2.0%,” Alfa Bank said in its morning monitor. “We caution though that volatility remains at record highs and investors are jittery because of
a belief that fiscal plans and the Fed’s ramped-up funding actions wouldn’t be sufficient to offset the economic impact from the coronavirus... But the trouble with sudden economic stops being it is not easy to restart an economy. In our view the selloff is not yet over, with recession a possibility and the Covid-19 virus continuing to spread through Europe and North America causing severe economic disruptions."
Surging yields on Ukrainian bonds have shut the country out of the market, but it needs to raise $5bn this year somehow to meet its debt obligations.
The rates Ukraine has been charged for international bond placements tumbled in the last year as enthusiasm soared for newly elected President Volodymyr Zelenskiy and his promise of change.
But the mood has soured dramatically in the last month, especially following the March 4 government reshuffle that saw many of the young technocratic reformers sacked from their ministrial posts. Investors have been further fazed by the timing of the reshuffle as the double whammy of coronavirus and oil price collapse exacerbates uncertanties.