Friday?s news that Sibneft?s principal shareholders have halted the deal with Yukos at the eleventh hour.....
Friday?s news that Sibneft?s principal shareholders have halted the deal with Yukos at the eleventh hour threw a wrench into the works of the market?s promising recovery, as well as that concrete transaction. As a result, the benchmark RTS Index lost 2% on strong turnover (MICEX - $389 mn, ADRs - $286 mn), with the protagonists ? Yukos (- 4.6%) and Sibneft (-3.6%) ? naturally taking the brunt. Other leading stocks fell less sharply, and three bucked the shock news completely by posting fresh solid gains: MTS (+2.2%), Vimpelcom (+2.6% ?close to the all time high at $69.5) and Norilsk Nickel (+2.1%).
The market will remain weak and volatile while the uncertainty over the Yukos-Sibneft situation persists ? and especially so long as the unknowns include uncertainty over how long it will be before any clarification materialises. So for now, this looks set to be a bumpy preelection week. However, whichever of the many possible interpretations of the Yukos-Sibneft imbroglio proves correct, the outcome is unlikely to entail a deterioration in fundamental risk, in our view ? and quite possibly the reverse. It is too soon to write off the December recovery.
Russian external debt was lower on Friday, in line with US Treasuries and global emerging debt markets. The EMBI+ Russia Index lost 0.7%, although its spread tightened by 2 bp to 275. The benchmark Russia 30 closed at 93 7/8. The domestic debt markets were also lower, reacting to the latest developments surrounding the Yukos/Sibneft merger. GKOs and OFZs lost 0.2-0.4%, although corporate and municipal rouble bonds were more resilient, only losing between 0 and 0.15%.