24 May 2009 | Russia Economic Scan

24-May-2009

Russia Economic Scan

In this edition: Russian jobless rate hits 9 year high, Ruble extends longest rally since 2007, Oil price props up Russian economy, Sibir offers Gazprom Neft shares to cut owner's debt, Russian stocks rose over 1% - closed the week up 5%.

Top headlines

Russia recession roars on with jobless at 9-yr high

• Russian data showed it's too soon to call the bottom on the country's first recession in a decade, with unemployment rising to a 9-year high and retail sales slumping for a 3rd month in a row.
• 200,000 lost their jobs last month, pushing up unemployment to 7.7m, or 10.2% of the economically active population. Retail sales fell 5.3% year-on-year, continuing their first contraction in 9 years which started in February. Capital investment shrank 16.2%. (Guardian)

Ruble Extends Longest Rally Since 2007 on Oil, Carry-Trade Lure

• The ruble jumped to as strong as 31.0887 per dollar today, the most since Jan. 12, and gained 3.2% in the week, its 6th weekly advance and the longest rally since September 2007. The central bank bought the most foreign currency on the market in almost a year this week as it sought to control the advance, said Mikhail Galkin, head of fixed-income and credit research at Moscow’s MDM Bank.
• “Oil at $60 is just very good news for the ruble,” said Beat Siegenthaler, chief emerging-markets strategist in London at TD Securities Ltd. “Investors are questioning again which currencies can get them some yield and at the moment Russia has one of the highest yields you can get.” (Bloomberg)

Oil price props up economy

• Oil remains the most important factor for Russian markets and its rise has helped the RTS become the second-best performing market this year, rising 63% since January 11. Despite industrial production falling 16.9% year-on-year in April and the economy remaining in recession, $60 oil has increased positive sentiment towards Russia.
• "It means there are no serious imbalances in the Russian economy," said Roland Nash, chief strategist at Renaissance Capital. "With $60 oil there is no crisis in Russia." (Moscow News)

Sibir Offers Gazprom Neft Shares to Cut Owner’s Debt

• Sibir Energy Plc said it’s selling shares to OAO Gazprom Neft to help ease the debt of former director Chalva Tchigirinski as the oil arm of Russia’s state- run natural gas producer aims to boost its minority stake. Sibir will “immediately” offer about 52.8 million pounds ($84 million) of shares as part of security provided by Tchigirinski, the oil company said in a statement today.
• The offer may help OAO Gazprom, the world’s biggest natural gas producer, to create a crude producer to compete with the world’s largest companies. Gazprom Neft will probably also acquire TNK-BP and OAO Russneft, said Chris Weafer, chief strategist with UralSib Financial Corp. (Bloomberg)

Russian Stocks Rise on Oil, Ruble Rally; Surgut, Sberbank Climb

• The 30-stock Micex Index rose +1.9% to 1,054.03 at the close in Moscow, extending this week’s gain to +5.2%. The index tumbled -5.5% yesterday, its biggest decline in a month. The dollar- denominated RTS Index advanced +1.2% to 1,013.37 today.
• Surgutneftegaz, Russia’s fourth-biggest oil producer, advanced +1.6% to 24.404 rubles, its second gain this week. OAO Rosneft, the country’s biggest crude producer, climbed +2% to 184.44 rubles. Sberbank, Russia’s biggest bank, climbed +3.7% to 39.01 rubles on the Micex Stock Exchange after dropping -6% yesterday. (Bloomberg)

Source: Russia Economic Scan