According to the respondents “EV” experts, now the most attractive for investors commodities, stocks of energy companies and corporations focused on growing domestic demand.
photo: Gennady Cherkasov
The end of this year promises to be interesting in all world markets: very many events occurred during the fall and early winter. In the oil market in Algeria will be a meeting of OPEC and other producers. With prior arrangement, Saudi Arabia and Russia, and the favourable comments in respect of the right of Iran to achieve and maintain the pre-sanctions production levels give reason to expect even if not a breakthrough result, but at least single solution. That will allow you to keep the faith of the market in negotiability manufacturers, and so keep from a new wave of sales (unless, of course, will not happen something extraordinary with the economy of the EU, the US or China).
Elections to the Duma and then presidential elections in the U.S. creates an intriguing political landscape — the results support the main Russian party, the ability of new movements to be among the parliamentary parties and the reaction to it from Europe and the new American leader will have a significant impact on the exchange rate, and the interest of foreign investors to Russian assets, including government bonds. “By the end of the year should be decided on the new rate hike by the fed. Apparently, it’s going to happen after the November US presidential election, however, the constant and conflicting signals from overseas increase volatility, especially in the oil market and in prices of precious metals,” — says Artem Deev from Amarkets.
However, more and more investors around the world can interpret the rate hike as a sign of stability in the global economy. So, the negative effect on financial markets from its expected rise will be small and short-term.
“We expect a favorable period for the oil and gas sector, though purchases will be constrained by concerns about growth in the tax burden on the company. Another promising sector is the electricity industry: it companies can become beneficiaries of the future expected growth rates or a possible increase in the rate of inflation and the significantly improved financial performance is not yet fully reflected in the quotations of their shares”, — said Dmitry Alexandrov of the IG “Univer”. Agrees with him Director of the BCS “Ultima” Stanislav Novikov. He drew attention to the fact that starting in 2016, the sectoral Micex Power increased by about 70%, which is significantly higher than in other sectors. Most companies have dramatically increased profits, have begun to reduce debt. A significant number of energy companies can pay relatively high dividends — this factor fuels the interest of medium term investors. Plus, of course, added to the low base effect, because the electric power industry for several years was the most depressed sector of the Russian stock market.
In the consumer sector, analysts say X5: the company’s results for the second quarter according to IFRS creates the potential to improve the consensus forecasts for 2016. Experts also returned in the list of the most attractive securities of the shares of ALROSA: privatization, the company will launch several catalysts.
Anton Kravchenko from Raiffeisen Capital ” for the future highlights “Dixie”, “Yunipro” and “Yandex”. “This year the company came a new President — Pedro Manuel Pereira da Silva from the Portuguese group Jeronimo Martins, which has considerable experience in food retail,” notes the analyst. Action “Yunipro” after the accident at Berezovskaya GRES look worse than the market and significantly behind other generating companies. Thus the company has better corporate governance and management focused on creating value for shareholders. Kravchenko believes that the growth driver will be information on the amount of insurance payout for the burned-out block.
“As for the prospects up to the end of the year, you should look at banks and retail. However, now the entry into the market does not look advisable, given the strong rise after the recent correction at the beginning of 2016 September and the coming months may prove to be negative for the Russian market, as the risks of the fed rate hike, falling oil prices and the devaluation of the ruble remain,” — said the CEO of the company “the Source” Robert Bagratuni. Therefore, in his opinion, it is better to start investing immediately after the correction and fall to at least 1900 points on the MICEX index: this investment will allow us to obtain the highest return.
Andrei Shenk from Alfa-Capital sees growth potential in the shares of companies — exporters of raw materials. Prices are now close to historic lows, and most likely in the next few years, the strong reduction we will not see. The Russian company remains one of the most effective — for example, the EBITDA margin of the Russian ferrous metallurgists are now above 20%, whereas global peers are working at the level of 12-13%. “The ratio of profits and dividends of Russian companies look cheap even compared to counterparts in other emerging markets. From individual names I would have said Severstal, NLMK, Acron, PhosAgro, ALROSA. To avoid we would recommend companies with a strong exposure to the domestic market, as well as a large exposure to the banking sector,” — said Schenk.
However, these recommendations are relevant at the moment. Given the undervaluation of most securities on the Russian stock market on the horizon to three years, special attention should be paid to the banking sector (Sberbank, VTB), oil industry (LUKOIL, “Surgutneftegaz”, “Rosneft”) and retail (“Magnet”). With such a long term planning horizon is expected to rebound in oil prices that will impact directly on the securities of oil companies, as well as the recovery of the Russian economy that will give a serious impetus for banks and the consumer sector.
Obviously, to date, an effective portfolio should contain different asset classes. Should a certain percentage to keep in ruble-denominated bonds, as this market is still maintained good growth potential. Also some part of the portfolio is to hold in foreign assets, which is best done through the purchase of portfolios, for example, units of the Fund. As diversification can also be interesting for precious metals.