The stock market.
In September, the market surpassed, after several attempts, the psychologically important level of 500 points of the MICEX Index. As a result of the month, the MICEX Index grew by 6,4% to 515,17 points. Leaders among the blue chips were the common shares of Norilsk Nickel, which grew by 25,5%. Also grew the common shares of RAO UES (2,51%), LUKoil (5,02%), YUKOS (2,99%), Surgutneftegaz (6,35%) and Sberbank (3,28%). The common shares of Rostelekom and Mosenergo dropped by 1,65% and 1,9% respectively.
Market participants' activity in September was higher as compared with August. The total volume of trading in stocks grew by 6,5% to 245,6 billion rubles, while the average daily volume grew by 1,6% to 11,16 billion rubles.
The market of corporate, subfederal (regional) and municipal bonds.
In September, in the sector of corporate and regional bonds there was noticeable increase of business activity. As a result of the month, the total volume of transactions in corporate and regional bonds reached 56,1 billion rubles, about 1,58 times more than in August. The volume of primary placement in September amounted to 14,6 billion rubles, 1,59 times more than in August. The volume of secondary trades reached 32,1 billion rubles (a 1,63-fold growth against August), while the volume of REPO operations reached 9,4 billion rubles (a 1,39-fold growth).
In September, most of the liquid issues of corporate and regional bonds showed substantial drop in prices. As a result of the month, the yield of the bonds of the Government of Moscow (the 26th issue) grew by 1,2 points, the yield of the bonds of the Administration of Khanty-Mansi Autonomous District grew by 0,9 points, the yield of the bonds of the Administration of Moscow region grew by 0,3 points, the yield of Gazprom bonds grew by 0,4 points, the yield of ALROSA bonds (the 19th issue) grew by 0,3 points, and the yield of TNK bonds (the 5th issue) grew by 0,7 points.
The government securities market.
In September, the volume of secondary trades in the GKO/OFZ market reached 12,87 billion rubles, 7% less than in August. Direct REPO operations against the Bank of Russia accounted for 87% of the total volume of trading - 146,6 billion rubles, this year's maximum.
The yield of the most liquid issues of government securities grew by 0,03-3,27 points to 6,9%-8,9% of yearly interest. Certain issues of government securities grew in price. In particular, the profitability of OFZ/AD 45001 dropped by 0,01 points to 8,08% of yearly interest.
In September, three Finance Ministry's auctions were held to place issues OFZ/FD 27024 and 27025 and issue OFZ/AD 46002. The total volume of placement reached 6,89 billion rubles. The most successful was the auction to place OFZ/FD 27024, at which 62% of offered securities were sold. At the auction to place OFZ/FD 27025, 20% of offered securities were sold, while at the auction to place OFZ/AD 46002 - 39%. Later, additional placements of OFZ/FD 27025 to the sum of 517,43 million rubles at par and OFZ/AD 46002 (322,7 million rubles at par) were made in the secondary market. Besides, additional placements of OFZ/AD 46014 to the sum of 31,1 million rubles were made.
The foreign exchange market.
As a result of the month, the exchange rate of the ruble to the US dollar dropped by 9 kopecks (0,3%), while the exchange rate of the ruble to the euro dropped by 2,3 rubles (7%). On Tuesday, 30 September, in the UTS, the exchange rate of the dollar with today settlements reached 30,5914 rubles/1 dollar, while the exchange rate of the euro reached 35,5812 rubles/1 euro. The speculative mood of participants at the beginning and at the end of the month and the improvement of the situation with bank liquidity in mid September brought about the growth of average daily turnovers, which reached 609 million dollars in dollar instruments. Volumes of trading in the European currency remained at practically the same level - 5,7 million euros a day. The total turnover of the foreign exchange market grew by 33,5% and reached 13,5 billion dollars. The second half of the month saw increased sale of hard currency export receipts and the growth of the volume of SWAP transactions. As a result, the UTS' share reached 35,4%, the turnover of the afternoon session accounted for 64,6%, of which SWAP operations accounted for 24,8%.
Comment by Valeri Petrov, Deputy CEO of the MICEX
On of the main factors, which affected all financial markets in Russia in September, was the shortage of ruble liquidity in the banking system. The situation remained tense during the whole month, reaching its peak at the end of September, when deposits in correspondent accounts dropped below 100 billion rubles, deposits with the RF CB dropped to record low 4 billion rubles, while interest rates grew to 12-19%.
In the first half of the month, the big negative factor was the steep drop in world oil prices. By September 20, the Urals price dropped from 29 to 24 dollars per barrel, and only after OPEC had decided to reduce oil production quotas it went up to 26 dollars per barrel.
The situation in world stock markets did not affect the Russian market noticeably. Nevertheless, this factor should not be ignored. In September, world stock markets were going down. The French index CAC40 dropped by 6,5%, the British FTSE100 dropped by 1,6%, and the German DAX30 - by 6,6%. In the USA, DJIA went down by 1,5%. The Japanese Nikkey225 decreased by 1,2%.
The drop of the ruble's exchange rate to 30,70 rubles/1 dollar made market participants revise their evaluation of currency risks when forming investment portfolios, while the shortage of available funds in the banking system limited demand in the primary market.
In this situation, foreign exchange bonds were in a much better position than ruble bonds. The foreign debt market was affected positively by the improved situation in the US market of government securities: in September, the yield of 10-year US Treasuries dropped by 0,51 points to 3,39% of yearly interest. The price of Russian eurobonds grew by 2,81 points to 94,50% of the par value.
OPEC's decision to reduce oil production and export quotas affected positively all segments of the market of Russian government securities. The RF CB's decision to allow residents to buy Russian issuers' eurobonds for rubles without obtaining a special permit affected positively the eurobonds market.
In the foreign exchange market, the period of Summer lull gave place to a speculative upsurge and a palpable decrease of the exchange rate of the ruble to the US dollar, which reached about 1,5%. The exchange rate of the dollar reached 30,70 rubles/1 dollar. In the second half of the month the situation changed and the exchange rate of the ruble returned to the late August level of 30,40-30,50 rubles/1 dollar. The end of the month and of the quarter was connected for participants with the necessity to make compulsory ruble payments, which decreased demand for foreign currency and helped to strengthen the ruble. Besides, participants' expectations that the ruble would drop in early October collided with the current trends in the world market, where dollar dropped to 1,164 dollars per 1 euro, which affected the stabilization of the situation in the Russian internal market. The size of the gold and currency reserves (worth of 62,6 billion dollars) also argues for the stability of rate fixing.
In October, the problem of liquidity in the banking system is likely to be less acute than it was in September. If the exchange rate does not plummet, rates in the corporate and regional bonds market are likely to stabilize.
The situation in the market of ruble-denominated government securities is likely to improve. At the same time, one can expect the preservation of high rates in the market of inter-bank credit, which will deter the activity of the government debt market.
