DTI’s WEEKLY DIGEST [6/12 June]
#MAIN
Yellen: The regulator will not raise the key rate until the new uncertainties in the economy are resolved.
>> No matter what, Central Bank of the United States believes in the power of the economy and the financial market stability. The rate will be raised, most probably, no later than the fall of 2016(!).
Central Bank of Russia will raise minimum reserve requirements on liabilities in foreign currency by 1 percentage point from 1 July => The supply of foreign currency falls => Ruble is weakening => Central bank is concerned about significant ruble appreciation, among other things => Is the bottom near?
The World Bank has raised its forecast for growth of the Russian economy: GDP will grow by 1.4% in 2017 and by 1.8% in 2018.
#MACRO #FINANCE
Analysts at Goldman Sachs and Blackrock recommend that investors pay attention to assets in Russia and Brazil again, as growth prospects are gradually improving in these countries.
National Bank of Belarus will reduce the refinancing rate to 20% from 1 July.
The reason is the slowdown in inflation.
Bank of Korea has cut its base rate by 0.25 percentage points to a record minimum of 1.25% in order to support the economy.
China’s exports fell by 4.1% in May. The drop is more significant than expected, as the world demand remains consistently weak.
2016 will be a record for the amount of placement of ruble bonds in history: it will reach and perhaps even exceed 2 trillion rubles.
According to “Sberbank CIB”, the peak of the Russian corporate debt repayments will happen in 2017–2018, so some companies have decided to redeem the existing foreign currency debt now and to place new Eurobonds.
Now investors prefer to buy bonds of the developed countries (avoiding risky assets).
As a result, the profitability of these securities falls.
In evidence of that, Bloomberg’s Developed World Bond Yield index (indicator tracking the profitability of the developed countries’ bonds) has achieved the minimum of 0.62%.
The yield on UK ten-year bonds fell to a historical record just two weeks before the referendum on the Kingdom’s EU membership.
US Treasuries and German Bundes grow together with the British Bonds => the strong enough demand for reliable bonds is thus observed.
As the economic prospects are deteriorating and the outcome of the referendum is uncertain, investors put money into “safe havens”.
Interesting statistics:
- The volume of securities with a yield below zero has already exceeded $10 trillion in the world.
- The corporate bonds with negative profitability amount to more than $36 billion.
Central Bank of Russia may issue bonds during the nearest 2–3 months in test mode.
#INTERESTING
Project Loon is an ambitious Google project aimed at providing Internet access for people in remote corners of Earth. It supposes the launch of a large number of balloons with base stations, which will drift along certain air flows in the atmosphere and thus provide network coverage.
The company is now implementing a similar project in New Zealand, Australia, Indonesia, and Brazil, and is going to test it in the US. Now, Google having overcome many bureaucratic obstacles associated with the start of Project Loon in India, local authorities are willing to allow Google to conduct a pilot test of the project.
Sales of cars in Russia are declining again: sales of new cars and light commercial vehicles fell by 14.5% to the level of 107.6 thousand units in May 2016 in Russia.
In the previous Digest, we told you about the Saudi fund investing $3.5 bln in Uber. This amount may seem small in 5 years’ time. #Facebook is an example.
The Wall Street Journal: Amazon.com Inc. plans to invest additional $3 billion in India (in 2014, the company has already invested $2 billion into the country), which becomes the key region for the development of operations of the e-commerce giant.
Money transfer by means of a Telegram message: it has become possible after the launch of MoneyTalk Telegram, which enables you to transfer money quickly and securely to another person by his phone number or credit card number. The application was launched by Tinkoff Bank.
Arcade City: «Anti-Uber» on the blockchain basis.
The project plans to introduce the maximally decentralized system, which will allow drivers to independently negotiate on the amount and methods of payment with the clients, and the very payment is made through blockchain.
Bitcoin continues to grow: the cryptocurrency has risen more than by 40% for the last 3 weeks, reaching, at the time of writing the Digest, the level of 636 for the BTC-USD pair. This is the maximum value for the last 2 years.
The billionaire George Soros returned and began to buy gold after a long break, during which he was involved in charity. Experts believe that by buying gold, the billionaire is getting insured against the financial risks. According to the WSJ, the financier is concerned with:
- a possible “hard landing” of the Chinese economy,
- the migration crisis in Europe,
- the situation in Greece,
- possible UK exit from the EU that could lead to a collapse in Europe.
#OPINION [dti in media]
DTI managing partner Alexander Butmanov at “Kommersant” on 7 June 2016:
“In the words of General Kutuzov: ‘if you are praised by an enemy general, maybe you’re doing something wrong’”- Alexander Butmanov warns.
More: Kommersant
DTI managing partner Alexander Butmanov at “Kommersant” on 9 June 2016:
The central bank should not miss the moment to stop tightening the money supply.
More: Kommersant
*As we predicted, the key rate was lowered by 0.5 p.p. to 10.5% after the meeting.
DTI managing partner Alexander Butmanov at Money.Tactics at “RBC-TV” on 9 June 2016:
The structural, political problems have not disappeared.
“Imagine us living in a dormitory, and a bunch of our neighbors is unbalanced weird people who occasionally pop some strange feints up”.
