Page 48 - RUSRptAug18

8.3 Stock market
8.3.1 Equity market dynamics
Following the global Emerging Market sell off over the last two months,
Moscow Exchange (Moex) posted total turnover decline of 10.3% year-on-year to RUB71 trillion ($1.1 trillion).
Equity investors have been l eaving emerging markets (EMs) in droves in the first quarter as the US Fed tightening cycle pulls them back to the developed world’s bourses and the unstable politics of a looming trans-Atlantic trade war drives them out of emerging ones.
Russian stocks have become the cheapest amongst the leading emerging markets after the April 6 round of sanctions imposed by the US on a number of Russian businessmen and their companies.
Russia's equity market turnover decline of 12.3% year-on-year to RUB0.8 trillion ($125bn) in June, with the bond market up by 17% y/y to RUB1.7 trillion (adjusted for overnight bonds), the money market down 6.3% y/y, and foreign currency turnover down 8.4% y/y.
"June's operating results are the weakest this year, as we see a contraction of trading volumes across all segments," Aton Equity commented on July 4.
In the reporting month the derivatives market also declined 8.5%. Market participants' funds contracted 19% y/y to RUB571bn, but RUB funds that generate the main interest return increased by 5% y/y to RUB84bn.
Aton noted that trading balances remained stable in June. "Typically, trading updates do not have a direct impact on [Moex] stock price performance, but we see no near-term drivers for the stock and reiterate a Hold rating," the analysts commented.
Moex reported first-quarter IFRS results with fees and commission income down by 5% quarter-on-quarter and up 15% year-on-year to RUB5.5bn, which was in line with the market expectations.
Moex Ebitda declined 6% q/q and 8.3% y/y to RUB6.3bn, but the decline was due to one-off RUB856mn provisioning loss, which also led to RUB4.3bn net income declining by 14% y/y and missing the consensus expectations by 12%.
Russian mobile major MegaFon plans to delist its shares and GDRs from the London Stock Exchange (LSE) and will make a buyout offer to minority shareholders almost fully wiping out its freefloat, the company said on July 13. MegaFon listed on the LSE back in 2012, making one of the largest Russian international IPOs at the time. In 2018, remaining public is "not among [the] company's priorities," MegaFon commented, as it prepares to complete its transformation "into a digital business in the heart of the new digital ecosystem in Russia." The buyout offer for ordinary shares and the GDRs of total of 20.8% of the company's capital is priced at $9.75 per share, with the buyout to cost a total of $1.2bn-$1.3bn. Previously the company indicated that it will be more focused on growth than on pleasing minorities.
48 RUSSIA Country Report August 2018 www.intellinews.com