Where Support Lies For Mobile TeleSystems OJSC (ADR) (MBT), CTC Media Inc. (CTCM), Mechel OAO (ADR) (MTL)?
New York, NY – GDP INSIDER – 12/16/2014.
The Russian economy appears to be under attack from all sides. The country draws a significant amount of its revenue from oil and gas, but prices of oil have been in an almost free fall. There are even little hopes that prices will firm soon as bad news from the industry continue to hit the headlines. Besides the oil price fallout, the country is also facing sanctions from the U.S. and its European allies.
As things appear to be spinning out of control in Russia, the government there has been seen trying to right the ship but question remain about whether there is room for success. One of the latest major moves to keep the Russian economy out of recession and inflation came in the form of interest rate hikes. The central bank announced 17% hike in interest rate, up from 10.5%.
Such measures are expected to have widespread remediation effects on the economy. The central bank expects the move to stem the depreciation of ruble while appeasing Russians to keep their savings in the domestic currency. The move to raise the interest rate is seen as the start of more drastic measures to stabilize the Russian economy mid fallout in the oil industry and hurting sanctions.
However, even with the rate hikes, ruble continued to fall against the dollar. Ruble fell to a 16-year low just a several hours after the central bank hiked interest rates.
With the fallout in the Russian economy, eyes are on Russian companies. Since the country started facing sanctions and oil prices falling, investors have been cautious putting their money in Russian stocks. Now the new wave of attempts to keep ruble stable and the economy from falling into recession may further complicate issues for Russian stocks.
Mobile TeleSystems OJSC (ADR) (NYSE:MBT) is a Russian media company. It offers services such as mobile and fixed line solutions that include data and voice. The company is also into pay-TV business. The hike in interest rates and the subsequent big fall of the ruble has dented the stock by 14.45% in current trading session. Mobile TeleSystems OJSC (ADR) (NYSE:MBT) has support at $5.65, $5.30 on the downside.
CTC Media, Inc. (NASDAQ:CTCM), which a television network company. The company targets audiences aged between 6 and 54 years. The stock has moved down by 2% in today’s trading session on back of events. CTC Media, Inc. (NASDAQ:CTCM) has support at $4.30, $4.15 on the downside.
Mechel OAO (ADR) (NYSE:MTL) is in the mining and steel business. It deals in commodities such as coal and iron ore, which are already under pressure because of the unfavorable global market conditions. The stock also caved in amid restrictions to save ruble and the Russian economy.
Among other things, an environment of high interest rates makes capital borrowing more expensive, and Russian companies are expected to feel the heat amid the drastic economic measures. Mechel OAO (ADR) (NYSE:MTL) is down by 3.65% and trading at $0.512. The stock has support at $0.50, $0.45.
Among other things, an environment of high interest rates makes capital borrowing more expensive, and Russian companies are expected to feel the heat amid the drastic economic measures.
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