Market View
May 18, 2012
Equities: Equities continue going from weakness to slump as mixed 1Q results for some agro stocks and mounting European worries intensified flight to cash yesterday. Local equities are on course to lose another 10% this week with only a handful of healthy stories such as MSICH (+0.8%) set to weather the storm. Volumes in spot equities remained low while turnover in index futures kept growing, with the latter trading more than 6% below the spot UX index. Foreign-listed names offered little relief either with MHP sliding by 1% on a very strong volume of $2.4m despite publishing very good 1Q results. Kernel suffered more punishment for its weak 1Q performance, losing 8%. Milkiland (+1%) enjoyed a boost at closing as players tried to spot a ray of light in the ongoing process of the graduate removal of Russia’s cheese import ban. Expect more pain today as Russian Sberbank opens another 5% lower after yesterday’s 8% drop and the euro touches new lows on more rating downgrades.
Fixed income: An active day with the long end of the sovereign curve quite volatile but stabilizing towards the end of the session. Benchmark Ukraine 20s and Ukraine 21s were quoted at 87.25/88.25 (10.04%/9.85%) and 87.5/88.5 (10.13%/9.94%) while quasi-sovereign Naftogaz got hit at the 96.0 mark and closed as low as 95.75/96.75 (11.60%/11.09%). Oschadbank also saw some pressure and slipped to 84.0/86.0 (13.79%/13.03%), losing more than a point on the day. The most liquid corporates continued to weaken as dealers seem to run lower from any offers on the market. Strong 1Q12 financials didn’t help MHP as its bonds were re-priced around a point lower to 94.75/96.25 (12.43%/11.79%).
Daily
Ukraine’s industrial production (IP) was flat y-o-y in April, improving slightly from -1.1% y-o-y in March but underperforming both Bloomberg consensus and our estimate of +1.3% y-o-y. The improvement was fueled mainly by machinery output, which accelerat ...| Gazprom reportedly agrees to EU’s participation in potential gas transit consortium with Ukraine | May 18, 2012 |