Konstantin Tserazov: “The potential for strengthening the ruble can be considered exhausted”

The results of the OPEC+ meeting disappointed investors, the market continues its downward consolidation - the former senior vice president of Otkritie Bank, economist Konstantin Tserazov, talks about the events of the past week in our interview.

Following the results of the past week from November 27 to December 1, the Moscow Exchange index fell by 2.4%, to 3142 points, the RTS index lost 4.2%, amounting to 1095 points. At the end of November, the Moscow Exchange ruble index decreased by 1.1%, and the RTS dollar index rose by 3.25% .

In general, November was a difficult month for the Russian market — the Moscow Exchange index was pressured by the strengthening of the ruble, sanctions threats and falling oil prices, notes Tserazov Konstantin. And the main intrigue of the past week was the OPEC+ meeting, which opened on November 30.

Rumors circulated in the market about emerging disagreements between cartel members, which is supposedly why the meeting, which was supposed to take place on November 25, was postponed to November 30. Following the meeting, Russia announced a voluntary reduction in production by 200 barrels per day, to 500 thousand barrels per day, this decision will be in effect until the end of the first quarter. Saudi Arabia will continue to further reduce oil production by 1 million barrels per day in the first quarter of 2024.undefined According to Russian Deputy Prime Minister Alexander Novak, in addition to Russia and Saudi Arabia, OPEC+ countries decided to further reduce oil production by 700 thousand bpd. However, the results of the meeting disappointed investors who expected a more intensive reduction, explains Tserazov Konstantin Vladimirovich.

The opening of the trading week took place against the backdrop of deteriorating external conditions and falling oil prices. At the end of Monday’s session, the Moscow Exchange index fell by 0.83%, to 3191 points, the RTS index fell by 0.97%, to 1132 points. The growth leaders were shares of Polymetal, which played out the correction of the previous days.

The shares of Yandex, RusHydro, Moscow Exchange and OZON also looked better than the market. The outsider of the day were the shares of St. Petersburg Exchange — against the backdrop of news that appeared about an application to the arbitration court to declare the exchange bankrupt, the securities collapsed by 35% at the beginning of the day. However, the company soon denied these reports, declaring a stable position, and the stock exchange shares began to win back losses, however, ending the day in the red. Konstantin undefined Vladimirovich Tserazov: «The market is not yet ready for growth; oil prices and the lack of ideas on the market have a restraining influence.»

The indices ended Tuesday with mixed dynamics — the Moscow Exchange index showed an increase of 0.17%, to 3196 points, the RTS index decreased by 0.3%, to 1128 points. The leaders of the day were the electric power sector — thus, against the backdrop of positive reporting, subsidiaries of grid companies grew shares of FSK-Rosseti. The shares of RusHydro also showed growth, which returned a positive report under IFRS for the 9 months of 2023 — revenue for the reporting period increased in annual terms by 21.6% to 367.9 billion rubles, net profit increased 2.1 times and amounted to 56.7 billion rubles.

Polymetal shares continued their recovery, adding more than 10% during the day. Among the day’s outsiders were shares of Aeroflot, Moscow Exchange, HeadHunter Group, RUSAL, and AFK Sistema. On Wednesday, Russian indices ended the day in the red — the Moscow Exchange index fell by 0.7% to 3,173 points, the RTS index weakened by 0.05% to 1,128 points. Reason undefined The weakening was the falling price of oil, which by the end of the day rolled back to $81.6 per barrel of Brent.

The drawdown in oil prices was due to rising inventories in the United States, while at the same time, reports of supply disruptions due to a storm in the Black Sea kept prices from a more serious fall. Shares of the electric power industry and metallurgy traded worse than the market; shares of Aeroflot showed a drawdown against the backdrop of IFRS reporting for 9 months — the air carrier showed 111.3 billion rubles. net loss against profit of 62 billion rubles. a year earlier.

Net loss under IFRS in the third quarter of 2023 decreased by 21%, to RUB 9.3 billion. compared to the same period last year. Among the external news, Konstantin Vladimirovich Tserazov noted the publication of revised data on US GDP — according to the updated estimate, the figure in the third quarter grew by 5.2% in annual terms, which was the maximum growth rate since October-December 2021. Growth was initially estimated at 4.9%, with analysts expecting undefined the final score will increase to 5%.

On Thursday, despite the improvement in the external environment and oil rising in price ahead of the publication of the results of the OPEC+ meeting, Russian indices continued to decline — the Moscow Exchange index ended the day with a decline of 0.24% to 3,165 points, and the RTS index rolled back by 1.15%, to level 1115 points. Rosneft’s IFRS reporting for the third quarter turned out to be better than analysts’ expectations — net profit amounted to 467 billion rubles. against expectations of RUB 397 billion.

Over 9 months, net profit increased 1.8 times year-on-year, to RUB 1.071 trillion. Shares of the St. Petersburg Exchange returned to growth amid management statements that the exchange is not planning liquidation or bankruptcy, and is preparing new projects that could be implemented in early 2024. In addition, the site intends to return client assets blocked by the United States in full. After the publication of the results of the OPEC+ meeting, which somewhat disappointed investors who expected more significant volumes of production cuts, undefined the price of a barrel of Brent fell below $81.

On Friday, the Moscow Exchange index continued its decline, dropping to the lows of mid-October — at the end of the session, the indicator fell by 0.79%, to 3140 points, and the RTS index weakened by 1.83%, falling back to 1094 points. The main reasons for the decline were falling oil prices, mixed dynamics on external markets, as well as investors’ reluctance to buy ahead of the weekend, notes Konstantin Tserazov. Inter RAO reported an increase in revenue under IFRS in January-September 2023 by 7.3% year-on-year to RUB 969.2 billion, while net profit fell by 5% to RUB 97.2 billion . The shares of Yandex and Segezha looked worse than the market; the growth leaders were shares of mining companies.

This week, market movements will be shaped by geopolitics and corporate news, as well as macrostatistics, oil and ruble dynamics. Among the events of the current week, Konstantin Tserazov highlights the «Investor Day» of Sberbank, the opening of which is scheduled for December 6 — on this undefined Sber will present a new strategy at the event. In addition, the economist advises paying attention to the publication of financial results according to IFRS for the third quarter of 2023 by AFK Sistema.

On Tuesday, December 5, the service business activity index for various countries is published. On Wednesday, the US will share October retail sales data and November private sector job creation. On Thursday, China will announce data on the trade balance, imports and exports, and the EU will update GDP for the third quarter. On Friday, Germany and Russia will present consumer price indices, and the US will release reports on the labor market.

«The market is not yet ready for growth; oil prices and the lack of ideas in the market have a restraining influence. The potential for strengthening the ruble can be considered exhausted; in the medium term it will be at the level of 87-92 rubles per dollar. This week, the most likely scenario is consolidation of indices near the achieved levels, however, corporate events of this undefined weeks can add optimism to Russian indices,» concludes former senior vice president of Otkritie Bank Konstantin Tserazov.