The stock market.
In the first six months of November the stock market went down to 430 points by the MICEX Index. In the second half of the month, the market showed stable growth. As a result of the month, the MICEX Index grew by 3.4% to 484.73 points. Leaders among the blue chips were the common shares of Norilsk Nickel, which grew by 11.7%. Also grew the common shares of Surgutneftegaz (6.2%), LUKoil (5.4%), Rostelekom (4.3%) and RAO UES (1.8%). The common shares of Mosenergo dropped by 6.7%, Sberbank - by 2.1% and YUKOS - by 1%.
In November, the activity of market participants was considerably lower than in October. The total turnover of operations in stocks amounted to 199.6 billion rubles, the daily average turnover of trading decreased by 28% over October figures to 10.5 billion rubles. In November, the turnover of REPO operations in stocks amounted to 27.07 billion rubles or 13.6% of the total turnover of operations in stocks (in October - 12.85%). The turnover of operations in the negotiated deals mode decreased to 18.36 billion rubles or 9.2% of the total turnover of operations in stocks (in October - 10.4%).
The market of corporate and regional bonds
In November, in the sector of corporate and regional bonds there was noticeable decrease of investors' activity. This was accompanied by certain growth in prices on most liquid issues. As a result of the month, the total volume of transactions in corporate and regional bonds amounted to 53.95 billion rubles, of which 12.34 billion rubles (22.88% of the total turnover) was accounted for by primary placements, 35 billion rubles (64.87%) - by secondary trading and 6,61 billion rubles (12.25%) - by REPO transactions. In November, leading positions in the structure of the exchange turnover were held by corporate bonds - 34.01 billion rubles (63.03% of the total turnover of this sector). Subfederal (regional) and municipal bonds accounted for 19.83 billion rubles (36.75%) and 0.01 billion rubles (0.02%) correspondingly. As compared with October, the total volume of trading in the sector of corporate and regional bonds decreased by 29.87%.
In November, the yield of most liquid issues of corporate and regional bonds decreased noticeably. In particular, the yield of Mosgorzaim bonds (the 29th issue) decreased by 0.60 points, the yield of Mosgorzaim bonds (the 33d issue) decreased by 0.45 points, the yield of the bonds of Khanty-Mansi Autonomous District decreased by 0.88 points, the yield of Gazprom bonds decreased by 0.30 points, the yield of ALROSA bonds (the 19th issue) decreased by 0.74 points, and the yield of VTB bonds (the 3d issue) decreased by 0.36 points.
The government securities market.
In November, the market of GKO/OFZ showed minimal business activity since March 2002. The trading volume in the secondary market amounted to 5.18 billion rubles, of which OFZ-FD accounted for 2.93 billion rubles, OFZ-AD - for 2.17 billion rubles, OFZ-PD - for 60 million rubles, and GKO - for 20 million rubles. The turnover of the secondary market was 2.7 times smaller than in October. The volume of direct REPO transactions amounted to 2.16 billion rubles, which has been the lowest figure since May this year. The yield of liquid issues of OFZ-FD in the secondary market changed within the range from -0.7 to +1 points, the yield of OFZ-AD issues changed within the range from -0.5 to +0,4 points.
Two auctions were held in November. At the auction to place OFZ-AD of additional issue #46001RMFS, with the volume being equal to 2.5 billion rubles (with demand being worth 1.4 billion rubles), the volume of placement amounted to 892,160 million rubles. As a result of the auction, the average weighted yield amounted to 8.25% of yearly interest, which exceeds by 0.03 points the average weighted yield of this security in secondary trading. At the auction to place OFZ-AD of additional issue #45001RMFS, with the volume being equal to 2.5 billion rubles (with demand being worth 2.1 billion rubles), the volume of placement amounted to 1206.862 million rubles. As a result of the auction, the average weighted yield amounted to 7.67% of yearly interest, which exceeds by 0.07 points the yield of secondary trading.
The foreign exchange market
In November the exchange rate of the dollar to the ruble dropped by 19.8 kopecks (- 0.7%), the exchange rate of the euro grew by 72.3 kopecks (+2.1%). On the last trading day of the month, November 28, the exchange rate of the dollar with today settlements in the UTS reached 29.7359 rubles per 1 dollar, while the exchange rate of the euro reached 35.4921 rubles per 1 euro. Average daily turnovers in dollar-denominated instruments dropped to 607.6 million dollars, while remaining at the previous level of 6.6 million euros a day for the euro. The total turnover of the foreign exchange market decreased by 32.5% and reached 11.7 billion dollars, of which 80.3% was accounted for by cash transactions, 19.7% - by SWAP operations. The afternoon session accounted for 58% of the total volume of trading in the foreign exchange market. The share of the UTS in the turnover decreased from 47.2 to 42%. The amount of transactions concluded through regional currency markets did not change and amounted to 29.3% of the turnover in the UTS.
The standard contracts market
In November, the total turnover of trading in futures contracts on the US dollar amounted to 163.55 million rubles or 5572 contracts. The daily average turnover of trading grew by 6% over October and reached 8.6 million rubles. The volume of open positions as of the end of November amounted to 3760 contracts (about 3.8 million dollars), having increased by 85% over the end of October. Of the total number of open positions 2220 positions are accounted for by December 2003 contract, 1310 - by January 2004 contract, 100 - by February 2004 contract and 100 - by March 2004 contract. The average spread for nearest foreign exchange contract was 1-2 kopecks.
Comment on the situation
Fluctuations in the stock market were largely caused by the market's first reaction to the events around YUKOS and later forecasting of the consequences of these events for the whole market. Technical factors also affected the market considerably, among them the correction of the market after its sharp drop in the first half of November.
The situation around YUKOS remains hazy considering messages about the suspension of the merger of YUKOS and Sibneft. Besides, no decision has yet been made on the rules of selling wholesale power generating companies in the framework of the restructuring of RAO UES.
The market was growing thanks to internal corporate news, among which was the adoption of the 10-year program of strategic development of LUKoil, which envisages 25 billion dollars worth of investments, and the upgrading of Gazprom's rating to BB- by S&P.
In the first half of the month, in the sector of corporate and regional bonds there was noticeable drop in prices for most issues, caused by the overall deterioration of the situation in the Russian financial market. As a result, in the first week of November, the yield of many securities grew by 0.5-0.8 points. Later the situation changed, and, against the background of gradual revival of the investment demand, prices for liquid instruments went up noticeably.
During the whole of November, two factors supported the market of corporate and regional bonds: the high level of liquidity in the banking system and a favorable foreign trade situation.
During the whole month, interest rates on the bonds of the US Government remained low enough (by 20 November the yield of 10-year Treasuries dropped to 4.15% of yearly interest, which is almost 0.20 points lower than the level of 31 October).
In December, the situation in the market of debt instruments will strongly be influenced by the dynamics of the exchange rate. In autumn, the ruble became stronger, and if this tendency continues in December, the probability of further decrease of the yield of corporate and regional bonds will grow considerably.
Despite the uncertainty of the situation in the corporate sphere, favorable situation with ruble liquidity restrained the sale of government bonds in the secondary market. Even in late November interest rates in the market of inter-bank credit did not exceed 6-7% of yearly interest, which was 2 times lower than in late September or October. The macroeconomic situation is favorable to the government securities market. More than once, the RF Ministry for Economic Development and Trade raised its estimated GDP growth figure for 2003. On 19 November the Ministry raised its estimated growth figure from 5.9 to 6.6%.
In the foreign exchange market, the exchange rate of the dollar was influenced by the information coming from the international foreign exchange market. During the month the dollar dropped against the euro by more than 3% to record low 1.20 dollars per 1 euro. Several factors influenced the dollar negatively, among them information about the decrease of inflation in the USA and the imposing of temporary restrictions on imports from China.
High oil prices in the world market (in late November they fluctuated within the range of 27.9-28.5 dollars per barrel for Brent) also contribute to the growth of the ruble.
After stormy events and sudden changes in prices of the previous period, in November financial markets were seeking new points of equilibrium. As a result, in late November the foreign exchange market did not experience any serious changes in the exchange rate of the dollar, which fluctuated within the narrow range of 29.75-29.73 rubles per 1 dollar.
