The company and stock market
During the first four months of 2016 investors actively increased their investments into the Russian stock market. But in the middle of the year, on the back of expectations regarding Brexit voting, rise of US Federal Reserve System rate and oil price corrections, investors began to quit the Russian stock market. However, MICEX PWR index behaved otherwise: in May-September the sector was flooded with investor attention. Such behavioral pattern shown by investors may be a mere underestimation and low interest among investors to the sector in the previous years. Positive news regarding dividends amounting to 50% of the net profit shown by the sector companies also pumped the interest of investors to the sector.
Active trading subsided only in October.Source: www.moex.com
Situation changed dramatically in November on the back of OPEC’s historical decision to cut oil output and unexpected US presidential elections results. OPEC’s decision to cut oil output boosted crude oil prices that ended in positive impact on rouble-nominated assets. However, the key trigger for foreign investors was US presidential elections won by Donald Trump. According to the data from Emerging Portfolio Fund Research, almost US$ 1.6 billion were invested into Russian funds between the Trump’s victory in November and end of 2016 as a compensation for outflows in previous years.
During 2016 the investment community showed a far greater interest to the Company’s stock, if compared to the previous years.
IDGC of Urals’ trading volume in RUB million during 2016 (main market)Source: www.moex.com
IDGC of Urals’ trading volume in million shares during 2016 (main market)Source: www.moex.com
The key alleged factors of immense interest to the Company’s shares from investors during 2016 are:
- a)low interest of investors to the Company’s shares in previous years due to several reasons (extreme volatility of the Russian stock market and overall low investment activity caused by geopolitical risks, drop in commodity prices, Fx volatility, general deceleration of Russian economy, unclear regulatory policy towards the sector);
- b)the highest dividend (50% of RAS net profit) paid by the Company’s in its lifetime.