Simultaneously, in September there was observed a growth in the amount of gold and foreign exchange reserves of the RF Central Bank (+ 6.5 per cent); as a result, the amount of these reserves made US $ 159.6 billion as on October 1, 2005. In the first three weeks of October, the amount of gold and foreign exchange reserves, as well as the narrowly defined monetary base increased by 4.2 per cent and 2.2 per cent respectively. At the same time, a significant portion of liquidity was accumulated in the RF Stabilization Fund. As on October 1, 2005, the amount of the Fund was registered at RUR 960.7 billion (+ RUR 128.6 billion in comparison with the figures registered on September 1, 2005).
It should be noted that according to the bulletin of model based estimates of short time forecasts of the RF social and economic indicators, in October the national gold and foreign exchange reserves should increase further by 9 per cent and exceed the level of US $ 177 billion, while by the end of November these figures should make US $ 180.9 billion.
It should be reminded that the narrowly defined monetary base is fully controlled by the RF Central Bank in contradistinction to the monetary base in the broad definition.
Jul Jul Jul Jul Jan Jan Jan Jan Sep Sep Sep Sep Mar Mar Mar Mar Nov Nov Nov May May May May Changes in the Monetary Base and in the Gold and Foreign Currency Reserves in 2003 - 2004.
1450 Monetary Base (billion rubles) Gold and Foreign Currency Reserves (billion dollars) Figure 2.
In September of this year, the RF Finance Ministry made payments pertaining to the RF foreign debt amounting to US $ 927.7 million. The payments associated with the servicing of the foreign debt made US $ 250.9 million, while the repayment of the principal debt amounted to US $ 676.8 million.
P. Trounin Financial MarketsIn October, there was observed a certain deterioration of the overall business situation on the Russian financial markets. Prices of debt securities denominated both in foreign and national currency fell throughout the month as a reaction to the growth in interest rates of US treasury bonds. Over the month, the stock market on the whole declined. The fall was not only of the technical nature caused by the sharp decline in stock prices, but also resulted from the stabilization of oil quotations. Even the rise in the credit ranking of RF bonds denominated in foreign currencies by the MoodyТs agency failed to restore a stable demand for Russian stocks.
The Market for Government Securities Рынок In October, the quotations of Russian Eurobonds declined at the rates outpacing those registered a month ago. The negative trends on the market appeared due to the fact that many investors decided to fix their profits derived in the result of the growth observed over many months running. Among the factors behind the growing supply of securities there may be singled out the continuing decline in oil prices and still high risks of further toughening of monetary policies in the USA, as well as an increase in the base interest rate.
According to the data as on October 27, the yield to maturity of Russian Eurobonds RUS-30 was 5.68 per cent p.a.; RUS-18: 5.90 per cent p.a. Besides, on the same date the yield to maturity of the In the course of preparation of the survey, there were used analytical materials and surveys published by the Zenith Bank, investment company ATON, MICEX, and the materials presented at web sites of Russian issuing companies.
billion rubles billion dollars 23.021-7.12.2-8.02.1-7.09.6-13.04.9-15.06.20-26.10.10-16.11.22-28.12.12-18.01.16-22.03.19-25.05.21-27.07.11-17.08.22-28.09.13-19.10.29.09-5.10.28.04-4.05.30.06-6.07.Russian Eurobonds was: Minfin bonds, 7th tranche: 5.71 per cent; Minfin bonds, 6th tranche: 4.84 per cent; Minfin bonds, 5th tranche: 5.41 per cent; RUS-07: 5.0 per cent.
Figure 1.
Minfin bonds' yields to maturity in August - October 6.5% Tranche 5 Tranche 6 Tranche 6.0% 5.5% 5.0% 4.5% 4.0% 3.5% Figure 2.
Yields to maturity of the Russian eurobonds with maturity in 2030, 2018 and 2007 in August - October 6.5% 6.0% 5.5% 5.0% 4.5% 4.0% 3.5% USD-2030 USD-2007 USD-The upward trends registered over the several preceding months on the market of internal public debt ceased in October. One of the factors behind the change in the trend was a sharp decline in the quotations of Russian Eurobonds. At the same time, a rather stable demand observed on the primary 01.08.03.08.05.08.09.08.11.08.15.08.17.08.19.08.23.08.25.08.30.08.01.09.05.09.07.09.08.09.12.09.14.09.16.09.20.09.22.09.26.09.28.09.30.09.04.10.06.10.11.10.13.10.17.10.19.10.21.10.25.10.27.10.01.08.03.08.05.08.09.08.11.08.15.08.17.08.19.08.23.08.25.08.30.08.01.09.05.09.07.09.09.09.13.09.15.09.19.09.21.09.23.09.27.09.29.09.03.10.05.10.07.10.12.10.14.10.18.10.20.10.24.10.26.10.market makes it possible to suggest that the decline in demand is of temporary nature. In the beginning of the second half of the month, the quotations of Ruble denominated bonds somewhat stabilized, what was caused, among other factors, by the restoration of quotations of Russian Eurobonds and a rather high level of liquidity registered in the banking sector.
Over the period from October 3 to 27, the aggregate turnover of the secondary GKO OFZ market made about RUR 57.3 billion, while the average daily turnover was at RUR 3 billion (as compared with RUR 81.2 billion and RUR 4.77 respectively as observed in September). Therefore, the activity on the market has significantly declined in comparison with the indicators registered in September. On October 19 there was held an auction for the placement of OFZ PD 25057. The amount of the issue made RUR 8 billion, while the actual amount of the placement made RUR 4.46 billion. The weighted average yield of the placement made 6.86 per cent p. a.
As on October 27, the amount of the GKO - OFZ market made RUR 697.53 billion at par and RUR 689.37 billion at the market value. The duration of the GKO-OFZ market portfolio was 1804.89 days.
The Market for Corporate Securities The business situation on the stock market. In October, on the Russian stock market there prevailed negative trends, what resulted in a decline of quotations of the traded securities. Thus, in the beginning of the first week of the month, the growth registered on the market in September continued and major Russian stock indicators reached new historical maximums. For instance, the RTS index overcame the mark of 1000 points and on October 4 closed at 1045.11 points. Later, the growth ceased. Among the major factors behind the sharp change in the trend there could be singled out a significant decline in the world oil prices, negative dynamics of world capital markets, and depositary receipts for Russian shares. Sales increased after on October 5 there was published information about new searches and seizure of documents in a number of banks and law offices in relation to the investigation of the legalization of illegal incomes by YUKOS employees.
Figure 3.
100 1 000.950.The total volume of trading ($) The RTS Index 900.850.800.750.700.650.600.550.500.450.400.350.At the same time, the fall on the market continued only till the end of the first week of the month and already on October 10 markets opened with a significant growth, which continued two days and compensated about a half of the decline registered earlier. Later, there was observed the next УbearФ wave, which prevailed until the end of the third week of the month and resulted in a rather significant points mln US dollars s 01.09.17.09.05.10.21.10.09.11.25.11.14.12.30.12.25.01.10.02.01.03.18.03.05.04.21.04.12.05.27.05.15.06.01.07.19.07.04.08.22.08.07.09.23.09.11.10.27.10.decline in prices. It seems that this decline was provoked by the mixture of several negative factors, which included a certain deterioration of the business situation on world stock markets, as well as increasing risks of further growth in the US interest rate.
Approximately since the beginning of the last week of the month the decline has stopped and on the market there was observed a trend towards a gradual increase in demand for Russian stocks. These developments facilitated a certain rise of stock indices, although somewhat volatile. The increasing volatility was evidence of high uncertainty of investors with respect to the further perspectives of stock trends. One of the factors behind this uncertainty was the situation on the world oil market, where there were registered no clear dynamics. Besides, uncertainty on the market increased because investors expected the decision of the open market committee of the US FRS as concerned the level of interest rates. In the case the rate increased any further, emerging markets, including the Russian market, could experience an outflow of foreign capitals and as a result there could be observed a further decline in quotations. Even the fact that the ranking of Russian bonds denominated in foreign currencies was raised by the MoodyТs agency had only a short term effect on the market.
Figure 4.
Dynamics of the Russian Blue Chips from September 27 to October 28, 80.0% 70.0% 60.0% 50.0% 40.0% 30.0% 20.0% 10.0% 0.0% -10.0% -20.0% Change in price (%) On the whole, in the period between October 3 and October 28, the RTS index decreased by 12.per cent and made 910.75 points or by 128.01 points in absolute terms. Over the same period, the turnover of the RTS trading with the shares included in the RTS index amounted to about US $ 1.million, while the average daily turnover at the RTS made about US $ 50.95 million (US $ 1 064.million and US $ 56.02 million respectively observed in September of 2005). Therefore, in comparison with the data collected in the preceding month, the activity of investors remained practically at the level registered in September. The highest and the lowest volumes of trade at the RTS made US $ 89.million (on October 6) and US $ 22.83 million (on October 10) as compared with US $ 99.05 million and US $ 25.07 million respectively registered in September.
Over the last month (from September 27 till October 28), practically all Уblue chipsФ were characterized by a decline in prices. The leaders in terms of the downward movement of prices observed in October were the shares in Rostelekom and Surgutneftegaz, the quotations of which declined over the month by 17.98 per cent and 14.39 per cent respectively. Somewhat slower rates of decline in stock prices were registered with respect to Nornickel and Sberbank of Russia (the prices changed by 9.per cent and 9.74 per cent respectively). These stocks were followed by the shares in LUKoil (- 7.per cent), RAO UES of Russia (- 6.56 per cent), Mosenergo (- 2.13 per cent), and Sibneft (- 1.37 per Ukos Tatneft Sibneft GMK LUKoil Russia Russia NorNikel RAO UES Mosenergo Rostelekom Sberbank of Surgutneftegas cent). The only shares demonstrating a growth in October were stocks of Tatneft (+ 8.93 per cent) and YUKOS (+ 74.24 per cent).
In October, the list of leaders in terms of the volume of turnover at the RTS7 looked as follows: the shares in LUKoil (35.33 per cent) and the RAO UES of Russia (21.72 per cent). Therefore, the aggregate turnover of the shares of these two issuers made about 57.05 per cent of the total turnover of trade. Besides, according to the results of weekly trade, among the leaders in terms of the volume of turnover were also the securities of Transneft, Rostelekom, and Norilsk Nickel.
According to the data as on October 28, the top five leaders of the national stock market by capitalization looked as follows8: LUKoil: US $ 44.08 billion; Surgutneftegaz: US $ 31.95 billion; Sibneft:
US $ 17.0 billion; the Sberbank of Russia: US $ 16.08 billion and GMK Norilsk Nickel: US $ 15.16 billion.
The market for fixed term contracts. In October, the activity of investors on the RTS market for fixed term contracts (FORTS) somewhat decreased in comparison with the September indicators.
Thus, in the period from October 3 till October 28, the aggregate volume of trade in futures and options at the RTS amounted to about RUR 99.24 billion (233.89 thousand transactions; 6.31 million contracts) as compared with RUR 104.37 billion (211.74 thousand transactions; 7.103 million contracts) registered in September.
Futures contracts accounted for the greatest percentage of transactions: the volume of trade in these contracts made RUR 90.81 billion (5.66 million contracts, 221.28 thousand transactions) over the period under observation. As before, options were in a much lower demand: the respective amount of trading made about RUR 8.43 billion (12.61 thousand transactions, 652.41 thousand contracts). The maximum trading volume was observed on October 12 and made RUR 6.68 billion, while the minimum trading volume (RUR 3.16 billion) was registered on October 20.
Corporate bond market. In October, there was observed a certain decline in quotations on the market of corporate bonds. In the beginning of the month the rates of return on traded instruments increased, what was caused by deteriorating situation in the sector of Russian Eurobonds, declining oil prices, decline of the Russian stock market, as well as a growth in supply observed on the primary market.
The most significant rates of decline were observed with respect to the bonds of the most reliable issuers with greater maturity terms. At the same time, the decline proved to be a rather short one. In combination with the rather stable demand registered on the primary market, it was evidence of a sufficient stability of the market. The extent of the decline was also limited by a rather high amount of liquidity in the banking sector.
Starting from the second half of the month, the decline stopped and on the market there was registered a certain increase in demand, which determined the positive growth of the market observed by the end of the month. The factor behind the improvement of the business situation was the stabilization of the Russian stock and Eurobond markets, as well as stabilization of the Ruble against the US dollar. An additional favorable factor was the decision of the MoodyТs agency to raise the sovereign credit ranking of the Russian Federation.
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