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Chris Weafer

Chris Weafer

Sunday, 22 May 2011 11:56

Unraveling Lebowski’s Rug

“That rug really tied the room together, did it not?”
from The Big Lebowski
By Chris SWeafer
Chief Strategist, Uralsib
Investor confidence continues to be undermined by erratic growth signals in major economies and by the threat posed by the still unresolved eurozone sovereign debt issues. Friday’s profit warnings from several big US companies, Fitch’s downgrade of Greek debt and the Bundesbank warning of slower growth in Germany completely undermined the fragile attempt to rally from recent weakness. That news combination sent investors home wondering if the apocalyptic warnings of Judgment Day on Saturday (if you’re reading this, they were wrong again) might even be true. It is very much a case of bracing for even more bad news, staying defensive/liquid and avoiding any risk investments until markets find better support.
Published in Chris Weafer's Investor Notes
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Saturday, 21 May 2011 20:41

BP-Rosneft: Far from over…all have too much at stake

By Chris Weafer
Chief Strategist, Uralsib
This deal is far from dead. BP and Rosneft formally ended their deal to jointly explore the arctic when the deadline to reach agreement with the AAR shareholders passed on Monday. Since then there has been speculation that Rosneft will now look elsewhere for a partner and exclude BP. Shell, Exxon, Total and Chevron have been cited as possible partners in recent days. But, I still think that a BP-Rosneft deal is the more likely outcome and I expect that talks are still taking place to resolve the issues. The Russian Energy Minister, Sergey Shmatko, and his boss Deputy Prime Minister Igor Sechin, have both been quoted as saying that the door remains open for BP and that fresh talks are possible/likely.
Published in Oil & Gas
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Thursday, 19 May 2011 08:31

Russia: Still on a Tightrope

By Chris Weafer

Chief Strategist, Uralsib

After twelve straight sessions of weakness, during which the RTS fell by 10%, Moscow’s bourses may now see yesterday’s tentative rally extend further. Buyers have returned to commodities and the dollar looks likely to give back some more of its recent gains against the euro. Of course, whether this is just a knee-jerk reaction to recent weakness or a more substantive rally will absolutely depend on global market sentiment rather than domestic factors and until that becomes clearer investors will remain wary. Today’s economic updates in the US (see below) are something of a double-edged sword; if the numbers are good then the equity rally will extend further but the dollar may recover and hold back oil. If the numbers are disappointing then the dollar will weaken further as hopes for additional stimulus will increase. But yesterday’s equity rally will be cut short.

Published in Chris Weafer's Investor Notes
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Sunday, 15 May 2011 19:45

Prevailing Nervousness

By Chris Weafer

Chief Strategist, Urasib

The dominant sentiment in all global markets is one of nervousness. Nervousness that Europe’s debt problems may worsen and threaten the pace of economic recovery in the region; nervousness that China’s efforts to contain inflation growth may slow demand for imported materials; nervousness that events across the Middle East may yet worsen and drive the price of oil to a level that also damages the growth outlook. That sentiment is unlikely to change much this week and, perhaps not for several weeks. For investors that means avoiding risk assets and stocking to defensive themes until some of these issues are resolved or stabilized (see Stock Watch below).
Published in Chris Weafer's Investor Notes
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Friday, 13 May 2011 08:20

Not only Triskaidekaphobics Need Worry (+ Weekly Fund Flows)

By Chris Weafer

Chief Strategist, Uralsib

After yet another bad Thursday session in global markets, we should see a very modest relief rally this morning. Today is Friday the 13th, a day most feared by triskaidekaphobics. But with global investment conditions far too uncertain, and sentiment far too fragile, most investors will also remain fearful and with little incentive to do anything other than continue sitting on the fence, observing and waiting. If historical patterns are repeated then this period of volatility and general weakness will continue into mid summer, i.e. end June, before finding a bottom.
Published in Chris Weafer's Investor Notes
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Thursday, 12 May 2011 06:44

Russia Today: 2 Million New Cars – 2 Car Parking Spaces

By Chris Weafer
Chief Strategist, Uralsib
Equities look set to extend yesterday’s losses at least into the morning session today. US equities closed near the session low, commodities were lower across the board and Asian markets are also tracking lower this morning. But, how the market trades in the afternoon will depend on where the dollar-euro rate trades and how US markets react to the April retail sales report.
Published in Chris Weafer's Investor Notes
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Wednesday, 11 May 2011 11:52

The Politics of Equity Issuance

By Chris Weafer

Chief Strategist, Uralsib

The uncertainty over sluggish economic recovery and political succession makes Russia a more difficult market for equity issuance in 1H’11. Investors are demanding a bigger risk premium in the valuations than most sellers are willing to concede. Year to date, $1.98 bln has been raised via IPOs while deals totalling $4.0 bln failed. In addition the state sold a 10% stake in VTB for $3.3 bln, via an SPO. Yandex yesterday formally launched marketing of its planned $1 bln IPO programme. See bigger comment below.
Markets are higher this morning as investor confidence slowly rebuilds from last week’s drop. Economic and earnings recovery indicators in the US, EU and Asia show that growth remains steady and Microsoft’s acquisition of Skype shows that cash-rich companies are willing to bet on current valuations.
Published in Chris Weafer's Investor Notes
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Monday, 09 May 2011 08:56

The Swinging Pendulum

The pendulum of the mind alternates between sense and nonsense, not between right and wrong. Carl Jung
By Chris Weafer
Chief Strategist, Uralsib
Equities, developing market currencies and commodity prices are all staging a modest, albeit encouraging, recovery across Asia’s bourses this morning. There is a strong sense that last week’s rout in commodities, emerging market equities and the euro were very overdone. $126 p/bbl (Brent) oil and an almost $1.50 dollar-euro rate may indeed have been excessive the previous week but the pendulum swung violently in the other direction. And we haven’t even reached the traditionally “silly season” yet. See the section on “stocks to watch” this week for ideas on how to best play this week’s expected volatility.
Published in Chris Weafer's Investor Notes
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Sunday, 08 May 2011 14:56

Fund Flows: Positive Russia – Stoic or Stunned?

By Chris Weafer
Chief Strategist, Uralsib
Despite the broadly based decline in global equity markets, and the destructive collapse in commodities, flows into Russia funds remained surprisingly positive last week. Russia and Korea funds were the only big country funds to attract new money. The only question is whether investors view last week’s oil and metals price collapse as temporary or, whether we will see the delayed reaction redemptions in this week’s figures. How the US dollar and oil trade in the first two days of the week will be crucial.
Published in Chris Weafer's Investor Notes
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Tuesday, 03 May 2011 22:20

Time To Rest + EU Energy Security + Weekly Fund Flows

By Chris Weafer

Chief Strategist, Uralsib

Today will be a quiet session on Moscow’s bourses as investors wind down for the May holiday week and the London GDR market is closed for a four-day holiday. Both London and Moscow will remain closed on Monday. See separate comments below on Russia’s oil product export ban, today’s EU Energy Security Conference and the Weekly Funds Flow analysis.
Published in Chris Weafer's Investor Notes
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