Table DYNAMICS OF THE GLOBAL STOCK INDICES (AS OF APRIL 25, 2010) Dynamics Dynamics Index Ticker Value within the since the year month(%) beginning(%) MICEX (Russia) MICEXINDEXCF 1 467.62 3.68 7.RTS (Russia) RTSI 1 602.99 5.47 10.Dow Jones Industrial (USA) Average (USA) DJI 11 204.28 3.26 7.NASDAQ Composite (USA) NASD 2 530.15 5.64 11.S&P 500 (USA) SPX 1 217.28 4.35 9.FTSE 100 (UK) FTSE 5 723.65 0.36 5.DAX–30 (Germany) DAX 6 259.53 2.28 5.CAC–40 (France) CAC 3 951.30 –0.94 0.Swiss Market (Switzerland) SSMI 6 767.97 –1.04 3.Nikkei–225 (Japan) NIKKEI 10 914.46 –0.74 3.Bovespa (Brasil) BUSP 69 509.50 1.20 1.IPC (Mexico) IPC 33 853.69 2.13 5.IPSA (Chile) IPSA 3 836.02 2.32 7.Straits Times (Singapore) STI 2 988.49 2.83 3.Seoul Composite (South Korea) KS11 1 737.03 2.32 3.ISE National–100 (Turky) XU100 58 338.36 3.05 10.BSE 30 (India) BSE 17 694.20 0.28 1.Shanghai Composite (China) SSEC 2 983.54 –2.49 –8.Morgan Stanley Emerging Markets Free Index EFM 812.07 3.01 3.* – Versus index indicator valid on March 28, 2010.
350,0% Dow Jones Industrial Average 325,0% NASDAQ Composite 300,0% The MICEX Index 275,0% The RTS Index 250,0% 225,0% 200,0% 175,0% 150,0% 125,0% 100,0% 75,0% Fig. 5. Dynamics of the main USA and Russian stock indexes (in per cent to the date 02.02.2009) 02.02.19.02.11.03.30.03.16.04.05.05.22.05.10.06.29.06.16.07.04.08.21.08.09.09.28.09.15.10.03.11.20.11.09.12.28.12.22.01.10.02.27.02.18.03.06.04.23.04.RUSSIAN ECONOMY: TRENDS AND PERSPECTIVES Corporate News ÎÀÎ “VTB Bank” On March 30, VTB Group (VTB Bank and its subsidiaries) has disclosed its audited financial results under IFRS for 2009: net loss made 59.6 billion rubles.; capital adequacy ratio – 20,7 per cent.
ÎÀÎ «Gazprpom» On March 30, “Gazprom” started construction of a marine pipeline section “Dzhubga – Lazarevskoe – Sochi”, which is scheduled for completion in June 2010. On April 9, there was started the construction of “Yuzhny Potok” gas pipeline. On April 21 supplements to the contract for the supply of gas to Ukraine were signed between “Gazprom” and “Naftogaz Ukraine”, providing an increase of annual gas supply in 2010 up to 36.5 billion cubic meters, as well as providing about per cent discount for gas payments to Naftogaz. On April 24, OAO “Gazprom” and OMV signed a basic agreement on cooperation in the framework of the project “Yuzhny Potok” in the territory of the Republic of Austria.
ÎÀÎ «Gazprpom Neft» In April, IR Global Rankings recognized OAO “Gazprom Neft” the best company in terms of disclosure financial reporting among global oil sector participants.
ÎÀÎ «LUKOIL» On March 24 “LUKOIL” has disclosed its consolidated financial reporting under U.S. GAAP for 2009: net profit amounted to 7,011 million dollars, which is by 23.3 per cent lower than in 2008, EBITDA – 13,475 million dollars, having decreased by 14.7 per cent. In addition, in April, OAO “LUKOIL” became a winner of the All–Russian contest “Best Russian Enterprises. Dynamics, Efficiency, Responsibility–2009” in the nomination” For Consistency In The Development Of Non– Financial Reporting”, as well as it was recognized as the best among Russian companies in the area of investor relations as per the survey of opinions, performed by the “Institutional Investor” magazine.
ÎÀÎ «Mosenergo» On April 16 «Mosenergo» has disclosed an audited consolidated financial reporting under IFRS for 2009: net profit amounted to 1,658 million rubles (by 19.3 per cent lower than the indicator of 2008).
GMK «Norilsk Nickel» On April 23 ordinary registered shares of GMK «Norilsk Nickel» have been included in the quotation list “A” of the MICEX first–level.
ÎÀÎ «Rostelecom» On March 30 the international rating agency Standard&Poor’s has confirmed long–term credit rating of OAO “Rostelecom” at the level of “BB” with “stable” forecast as a result of stable financial standing and maintaining of the dominant position in the market of telecommunications. On March 31 OAO “Rostelecom” has disclosed its audited performance results under RAS for 2009:
net profit amounted to 5,101.6 million rubles (or 27.9 per cent lower than a year earlier); index OIBDA (revenues less expenses for regular activities before depreciation) – 12,089.3 mln rubles, profitability under OIBDA – 19.7 per cent. In addition, in April, OAO “Rostelecom” was recognized as the best provider of telecommunications services for public needs in 2009.
Sberbank of Russia On March 29 Sberbank of Russia and OOO “Volkswagen Financial Services RUS” announced the launch of a joint program of new cars Volkswagen, Audi and Skoda crediting. On April Sberbank of Russia has signed an agreement with the Government of Moscow on participation of Sberbank in the “Muscovite’s Social Card” providing for the implementation of organizational and technical measures to expand the capacity of Muscovites social security cards for the purposes of FINANCIAL MARKETS public and municipal services in electronic form. On April 8 the international ratings agency Fitch Ratings has assigned a rating of the DB to AO “Sberbank” (Kazakhstan): long–term issuer default ratings (IDR) in foreign and national currency «BBB–», short–term IDR «F3», individual rating “D/E”, support rating “2” and National Long–term rating «AA (kaz)»; the forecast for long–term IDR and National Long–term rating – “Stable”. On April 15 Sberbank of Russia has disclosed financial reporting under RAS for the I quarter of 2010 (unconsolidated data): net income totaled to 43.2 billion rubles against 0.3 billion rubles for the I quarter of 2009, assets increased by 2.2 per cent to 7,270 billion rubles. Russian enterprises were granted credits in the amount of about billion rubles; capital adequacy ratio was approximately 21 per cent. Since April 19, Sberbank of Russia has reported the abolition of all tariffs and fees for the issuance of credit, loan application processing, for the servicing of credit account, as well as a number of other fees.
Corporate bonds market The volume of the Russian domestic stock market (as per nominal value of shares in circulation, denominated in national currency) in April of the current year, has somewhat grown again and at the end of the month reached RUR 2 466.3 bn, which is more than the relevant indicator of preceding month by 1.7 per cent1. The total number of emitters and emissions in circulation and denominated in the national currency has decreased again from 663 to 650 emissions and from to 368 emitters. There is still one emission of bonds in circulation, denominated in Japanese yens and two emissions denominated in US dollars.
In April the activity of foreign investors in the secondary corporate bonds market has somewhat decreased, though the volume of trading is still one of the highest indicators within the last two years. Thus, the trading volume in the MICEX market in the period from March 29 to April 23 of the current year amounted to RUR 107.4 billion (for comparison, from February 24 to March 26, the trading volume was equal to RUR 133.7 billion)2. In the period under review on the MICEX Stock Exchange there were committed 22.2 thousand of transactions in bonds, which is below the average level of the last few months.
In the current month the trend to growing index of the Russian market of corporate bonds IFX–Cbonds, which was observed since the beginning of 2009 was continued. Within the period from March 25 through April 23, the index has grown by 2.1 per cent points (or 0.8 per cent), having reached the highest level since the beginning of its assessments. The effective yield, upon significant decrease in March (exceeding 1 percentage point) remained at practically the same level (see Fig. 6). Therefore, to date, the yield to maturity on corporate bonds has stabilized at the pre–crisis level.
The duration of corporate bonds market portfolio dynamics has somewhat declined and made days (in late March the duration was equal to 756 days).
The total number of registered corporate bonds emissions has increased in comparison with the previous month has been significantly reduced. Thus, in the period from March 26 through April 23, twelve emitters have registered 21 bond emissions for the total amount of RUR 91.9 billion (for comparison, from February 26 through March 25, eight emitters have registered 25 emissions amounting to RUR 145.0 billion). More than 50 per cent of the registered issues were again exchange bonds, which recently of great interest the large public companies because of the rapid procedure of placing in the open market. The largest share of the reported emissions were seven series of bonds of OAO “Gazprom Neft” for the total amount of RUR 50 billion and two series of OAO “Aeroflot” bonds of in the amount of RUR 12 billionThe dynamics of primary bond market is extremely unstable after the expressed growth of primary bond emissions market at the end of preceding year, at the I quarter of 2010 this indicator has declined again, but in April has grown again nearly twice, having reached the maximum value since the beginning of the year. Thus, in the period from March 26 through April 23 there were placed 18 corporate bonds emissions, including 10 stock bonds issues totaling to RUR 83.3 billion (for comparison, from February 25 through March 25 there were placed 12 bonds emissions for the total amount of RUR 42.5 billion 1 As per Rusbonds information 2 As per “ Finmarket”Information agency.
3 Rusbonds data.
RUSSIAN ECONOMY: TRENDS AND PERSPECTIVES 25 (See Fig. 7). During the period Effective yield under review the largest bond Index IFX-Cbonds issues were placed by OAO “Gazprom Bank” (two series of bonds worth RUR 20 billion) 15 and OAO “EvrazHolding Finance” (two series of stock bonds worth RUR 15 billion) and OAO “Aeroflot” (two series of stock bonds worth RUR billion).
In the period under review six emissions of “RUSAL 0 Bratsk Aluminum Works” were recognized as invalid by the Federal Financial Monitoring Service (FFMS) due to non–placement of Source: Cbonds data.
any security (versus three emission offered for public Fig. 6.Russian corporate securities index and average weighted yield dynamics placement in the preceding period)1.
280 Within March 26 through Total emission April 23, twenty four Amount of placed issues emitters were supposed to redeem their bond issues totaling to RUR 26.3 billion.
However, three emitters have announced a technical default on repayment of their bond loans, totaling to RUR 2.5 bn (against four emitters, announced a technical default on repayment of their bond loans, totaling to RUR 4.0 bn in preceding period).
In May 2010, fourteen issues of corporate bonds Source: Rusbonds data redemption for the total amount of RUR 24.7 bn are Fig. 7. Corporate securities primary placement dynamics, denominated in expected.2 From March national currency.
through April 23, the real default on bonds coupon yield redemption was announced by four emitters for nine emissions (since February through March 25 – 10 emitters for nine emissions). In regard to two emissions, the emitters managed to reach agreement with bondholders to restructure the debts. However, if the situation with the performance of current debt liabilities has improved in April as compared with March, the situation with the return of investment to investors at maturity of the loan, on the contrary, is worsened. A real default on bonds redemption of the nominal value of their bonds was announced by six emitters for seven emissions, including OAO “Amurmetal”, OAO 1 FFMS of Russia data 2 Ïî äàííûì êîìïàíèè Rusbonds Effective yield, % Index IFX-Cbonds 24.09.22.10.22.214.171.124.22.01.22.02.24.03.22.04.22.05.23.06.22.07.22.08.24.09.24.10.126.96.36.199.26.01.24.02.24.03.23.04.26.05.25.06.23.07.26.08.25.09.22.10.188.8.131.52.25.01.24.02.25.03.23.04.Amount of placed bond issues Total volume of placed bond issues, billion rubles Jul.Jul.Jun.Jun.Jan.Apr.Sept.Jan.Apr.Sept.Jan.Apr.Feb.Feb.Feb.Oct.Mar.Oct.Mar.Oct.Mar.Aug.Aug.Nov.Dec.May.Nov.Dec.May.Nov.Dec.FINANCIAL MARKETS “Mirax Group” (in the preceding relevant period five emitters filed to redeem their loans in the framework of technical default)1.
Since April 16 of this year, the new edition of the Standards for securities emission and registration of securities prospectuses have entered into force, approved by the Order of Federal Financial Monitoring Service of Russia ¹ 07–4/pz–n from 25.01.2007. To improve the reliability of the debt instruments, one more measure was introduced: to submit to the Federal Financial Monitoring Service of Russia at the stage of state registration of issue and at the stage of state registration of the report on the outcome of the bonds emission secured by a pledge, a document containing the estimates of net assets value of the commercial organization that provides the guarantee. This innovation was due to the entry into force of the amendments to the Federal Law “On securities market”.
1 Cbonds data RUSSIAN ECONOMY: TRENDS AND PERSPECTIVES REAL ECONOMY SECTOR: TRENDS AND FACTORS O.Izryadnova According to the preliminary data of the RF Ministry for Economic Development, in the 1st quarter 2010 the GDP went up by 4.5%, output in industry growing by 5.8%, including that in minerals production – by 6.7%, in manufacturing industries – by 5.2%, in electricity, gas and water production and distribution – by 7.1%. Taking into account the fact that in the 1st quarter 2009 there was the most dramatic fall of output, the upsurge at the beginning of the current year was mainly due to the low base. The analysis of the economy development in the 4th quarter 2008 – 1st quarter 2010 demonstrates that at the moment it is the growth of external demand that is the main factor contributing in recession. At the domestic market the economic situation was still considerably influenced by the reduction in the investments in fixed assets by 4.7% versus the 1st quarter 2009 as well as the slack dynamics of the consumer market.
According to the preliminary data of the RF Ministry for Economic Development, in the 1st quarter 2010 the GDP went up by 4.5% versus the corresponding period of the previous year as compared with the drop of 9.4% a year ago. At the beginning of 2010 the macroeconomic situation was formed under the influence of the factors formed in the second half of 2009: the expansion of external demand, moderate dynamics of consumer market, low investment activity and high level of unemployment.