Guideline for the Moscow Exchange index: range 3550-3600 points


Market the day before

The Moscow Exchange Index has renewed its all-time high. However, the benchmark failed to maintain the occupied height. The growth leaders among the most liquid were TCS shares (TCSG 4,484.4, + 3.87%). Norilsk Nickel (GMKN 23 058, -4.40%) was among the outsiders against the background of the correction of production plans due to the latest accident. The USD / RUB pair hit a low since last July at 72.50.

Market and company news

Rusal (RUAL 0.822, + 0.37%) will report for 2020 under IFRS. Revenue is expected to decline by 9%, to $ 8.7 billion, with a decrease in EBITDA by 18%, to $ 880 million, with a profit of $ 810 million. Earlier, the company reported a decrease in aluminum sales by 6%, to 3.92 million tons. Meanwhile, the price for aluminum for the year increased from $ 1,500 to $ 2,200 per ton, while the profitable level for the company remains near $ 1,600. Rusal’s debt burden increased in the first half of 2020, but against the background of high sales in the second half of the year, it could drop to 5-6x EBITDA. The consensus forecast for the company’s shares assumes the level of 53 rubles. on the horizon of 12 months, which implies an upside potential of 20%.

The ruble continued to strengthen. The USD / RUB rate has not yet left the 72-75 corridor. The ruble was growing amid falling inflationary risks in the United States. Following the results of the March meeting, the FRS is likely to leave the rate unchanged and give an inflation forecast. The Sovdir of the Bank of Russia will discuss monetary policy issues this Friday, March 19. The media published speculations about the rate increase to 6% by the end of the year. However, we see no signs of deterioration in the foreign exchange and money markets, which would necessitate an urgent tightening of monetary policy. The strengthening of the ruble, in our opinion, indicates that the investment community is also not expecting a rate hike.

Trading Ideas

Surgutneftegaz (SNGSP 40.505, -0.48%, spec. Purchase, target: 45 rubles). The company’s quotes did not win back the rise in oil prices. At the same time, a dividend surprise is not excluded. In the medium term, the paper acts as a protection against the depreciation of the ruble, in the long term it is able to realize its positive potential against the background of a serious fundamental underestimation.

Expectations

We expect multidirectional dynamics. The external background is calm. The central international event is the meeting of the US Federal Reserve System. Forecast for the USD / RUB pair: a corridor of 72.50-73.50. The reference point for the Moscow Exchange index: a range of 3550-3600 points.

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