During the week, the market did not demonstrate any definite trends. As a result of the week, the MICEX Index grew by 3,37% and reached 479,96 points, the maximum value at the close of the exchange over the whole history of the MICEX market. Participants were quite active, and the daily average turnover of trades reached 9,9 billion rubles, a 5% increase over the previous week. The blue chips behaved differently. The shares of RAO UES rose in price by 9,5% and were the market leader. The common shares of Surgutneftegaz, which were leading in growth during the previous week, fell by 3,5%.
The market of corporate, subfederal (regional) and municipal bonds
In the sector of corporate and regional bonds, in the first half of the week, there was some decline in prices and growth of the yield of most liquid issues. On Monday and Tuesday, the yield of medium-term bonds increased by 0,2-0,3 points. Later, the situation stabilized, and in the second half of the week, prices went up a bit. On the whole, as a result of the week, the yield of medium-term liquid issues did not change, staying within the range of 11-14% of yearly interest. During the week, market participants' activity was relatively low.
The volume of operations on the market of subfederal and municipal bonds reached 4,79 billion rubles, secondary trades accounting for 0,74 billion rubles. The biggest number (88) and volume (about 350 million rubles) of transactions were concluded in the bonds of Moscow city of different issues. The total volume of secondary trades in corporate and regional bonds amounted to slightly over 1,6 billion rubles, which is less than the average figure for the prior period of 2003 by a factor of 1,2.
The government securities market
During the last week, on the GKO/OFZ market, prices continued to fluctuate against the background of low turnovers. The exception was the auction day, when the volumes came close to their average levels and prices demonstrated steady growth. On the whole, the volume of trades on the secondary market fell by 5%, as compared with the previous week, to 2,24 billion rubles, which is only a half of this year's average weekly level. As a result of the week, the average weighted yield of GKP dropped by 0,05 points to 3,35% of yearly interest, while the yield of OFZ grew by 1 point. The yield of OFZ-AD 45001 grew by 0,1 points to 8,06% of yearly interest, and the yield of OFZ-FD 27022 dropped by 0,4 points to 7,9% of yearly interest.
The foreign exchange market
The exchange rate of the ruble to the US dollar grew by 4 kopecks, while the exchange rate of the ruble to the euro grew by 1 ruble and 10 kopecks. On Friday, August 22, the exchange rate of the US dollar to the ruble, set by the Bank of Russia, was 30,31 rubles/1 dollar, while the exchange rate of the euro was 33,05 rubles/1 euro. The turnover of the foreign exchange market reached 2,3 billion dollars, and there were no significant changes in its structure. The UTS accounted for 38% of the turnover. "Dollar-ruble" operations continued to account for 98% of the turnover, of them 80% being cash transactions and 18% - SWAP operations.
Comment by Valeri Petrov, Deputy CEO of the MICEX
During most of the week, prices on the MICEX markets were affected by the rather low level of liquidity in the banking system, which secured the adequate volume of demand for financial assets. On Friday, the acute shortage of liquidity emerged - balances in correspondent accounts dropped by about 10% as compared to the average monthly level, while rates on overnight credits exceeded 4% of yearly interest. Problems with liquidity have already affected the markets to some extent, in particular, the stock market. To all appearance, they will continue to influence the markets in the beginning of the next week.
Other internal factors did not exert any significant influence on the market. The steady growth of the Russian economy generates positive expectations. In January-July, the GDP grew by 6,9%. The unequivocal success of the auction to distribute the additional issue of OFZ 27024 gave solid support to the whole market of debt instruments. The state of the Bank of Russia's gold and hard currency reserve, which has reached 64,7 billion dollars, plays its stabilizing role.
One of the most important external factors is the high oil price, which remains on the level of 28-29 dollars per barrel. At the beginning of the week, it went down, but then began to grow again due to the decrease of American oil reserves and the uncertainty of the situation in Iraq.
The debt market was also unstable. The decrease in the rates on the bonds of the US Government from 4,6-4,7% of yearly interest (for 10-year bonds) to 4,2-4,3% of yearly interest at the beginning of the week gave solid support to the debt markets in practically all countries. Then, the yield of American Treasuries came close to its 13-year maximum against the background of favorable forecasts of the future of the US economy.
The situation on world stock markets remained quite positive. The markets were growing, mainly, because of news confirming the gradual restoration of the US economy.
On the whole, the market demonstrated the stability of prices reached in the first half of August. It is hardly probable that prices will continue to grow before the problem of ruble shortage is resolved, although one can not expect any significant drop in prices.
