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[loganair] 31/7/2015 10:38

MegaFon's strong results published yesterday with OIBDA above our and the market’s expectations lowered fears about its ability to maintain its operational strength in the current macro environment. We revisited our recommendation in the name and raised it to a Buy. MegaFon GDRs gained 3.7% yesterday.

Strong 2Q15 performance - 2Q15 results beat expectations on profitability. MegaFon (JRS 13th Largest Investment)reported strong 2Q15 IFRS results yesterday. Revenues were in line with expectations and effectively flat YoY at RUB76.1 bln ($1.4 bln). OIBDA rose by 1.3% YoY to RUB34.7 bln ($658 mln) beating market expectations by 3% and implying a healthy OIBDA margin of 45.6% (0.9 ppt improvement YoY).

[loganair] 28/7/2015 15:38

Russian Gold Reserves Rise In June: Why Is Russia Still Buying Gold?

Summary:

•Russia increased its physical gold reserves in June by 800,000 ounces.

•This was one of the biggest additions of 2015 and shows Russia is still interested in accumulating gold.

•In terms of newly mined annual gold supply, this purchase annualized would be a chunky 12% of annual gold mine production.

•Investors should take solace in the Russian government's continual acquisition of gold and remember central banks think long-term.

A few days ago the Russian central bank released its gold reserve data that showed another increase in gold reserves during the month of June.

Russia added a large 800,000 ounces to its gold reserves in the month of June, which computes to just under 25 tonnes of gold or around $900 million dollars at current gold prices. This was one of the largest purchases this year and continues to show investors that Russia is still interested in increasing gold reserves despite the drop in the gold price.

This is really even more interesting that Russia is still buying because its economy has taken a knock from Western sanctions and from lower oil prices. The "why" is a key question for investors to understand, and at this point it's only conjecture as they haven't officially given a reason for their continued purchases.

Why is Russia Still Growing Gold Reserves?

In this case Russia's decision to continue to accumulate gold is a bit counter-intuitive because (1) its economy is struggling and the country needs to conserve reserves, (2) physical gold is less liquid than US bonds and other dollar denominated securities, and (3) the gold price has been falling for the last few years. All of these things suggest that now is not a good time for Russia to purchase gold - but yet they still accumulate.

The first thing investors need to understand is that central banks do not make investment decisions (in this case reserve allocations) in the same way that the standard investor or hedge fund makes decisions. Central banks make their decisions primarily based on strategic factors, and in this case there are only two strategic factors that would favor continued gold accumulation.

1.The belief that bonds are way over priced and due for a decline.

2.An effort to prepare for a weaker US Dollar.

For the first factor, there shouldn't be anybody arguing in the negative. Other than short-term traders trying to take advantage of "safe-haven" flows and short-term appreciation, there's really nobody who argues that the current interest rate environment is a good deal for long holders of bonds. Long-term inflation rates are well above all of the world's developed market bonds, and that means if these bonds are held to maturity, investors are guaranteed a loss on their investments. Since central bank reserves are held in too large of a quantity to play the short-term capital appreciation games, it simply doesn't make a good investment for Russian reserves. This factor is hardly controversial.

The second factor though is much more controversial and is really where investors can piggy-back on what a major central bank expects the world to look like down the road.

Gold is the only other world currency that represents a true "reserve currency" other than the US Dollar, and that's why gold tends to move in opposition to the US Dollar. It is a popular argument to say that it moves in opposition to the US Dollar because it is priced in US Dollars, but gold is also priced in every other currency - so why the much stronger relationship to the dollar? It is our belief it is specifically because gold is a US dollar alternative that has properties of a reserve currency - other currencies are more liquid but do not truly represent a reserve role.

Getting back to Russian gold accumulation, the Russians know very well about gold's role as a reserve currency, and the fact that they are buying more of it suggests they are preparing for a world where the US dollar plays a much smaller role. There may be no better proof of this than Russia's recent dealings with China where they have been eliminating the use of the US Dollar in their bilateral trade - these agreements are a clear attempt to move away from the US Dollar.

In a world with a smaller US Dollar role, there's no better currency to own than gold - the reserve currency for most of human history.

What Can Russia Really Do In the Gold Market?

Investors need to remember that 800,000 ounces, or around 25 tonnes, is actually a very large transaction in the physical gold market. That comes out to around 1% of gold mine supply (around 2500 tonnes a year), and if Russia keeps this up on an annualized basis, it would be around 12% of total newly mined gold supply. 12% of total mined gold is a very large chunk of newly mined gold from a single buyer - certainly something anybody following the gold world should note.

Takeaways for Gold Investors:

Some analysts have called this purchase a relief for the gold market as it signals that one of the biggest public buyers of gold (the Russian government) is still looking to add to its gold reserves. David Jollie, an analyst at Mitsui & Co. Precious Metals Inc, recently told Bloomberg, "It's interesting that Russia is still buying because its economy has taken a knock from Western sanctions and from lower oil prices."

We are not as surprised at the Russian government's decision to continue to accumulate gold as their consistent accumulation since 2008 suggests something more than simple "reserve diversification". In our opinion Russia is a strategic accumulation to both hedge against financial calamity and to push the world away from the US Dollar.

But ultimately Russia's accumulation comes down to a single belief - that gold offers the Russian central bank an asset that can preserve the purchasing power of its monetary reserves better than the other currency alternatives. To us that seems like the main reason why the Russian government would decide to transfer liquid, interest yielding, dollar-denominated bonds into less liquid, no-yield physical gold bars - especially as the Russian economy struggles with lower oil prices.

Thus long term investors should take this as a bullish factor and keep in mind the big picture when it comes to gold. We do not see a reason why investors should not consider having a large exposure to gold with positions in physical gold and the gold ETFs. Additionally, the miners that have been underperforming gold over the last few months may offer investors considerable leverage to any rise in the gold price. Investors looking for this leverage may want to consider evaluating gold miners such as Goldcorp, Agnico-Eagle, Newmont), or even some of the explorers and silver miners such as Tahoe Resources (we're not suggesting these companies specifically - only suggesting them for further investor research).

There is a reason why Russia continues to accumulate gold and investors should certainly keep this in mind the next time they read pessimistic research or financial news related to gold.

[loganair] 28/7/2015 09:22

The trough may be near … Yesterday, Economy Minister Alexey Ulyukayev said that the economy probably bottomed in 2Q15 and should begin to gradually improve in 2H15. According to Ulyukayev, Russia’s economy shrank 4.4% YoY in 2Q15. In 4Q15, the economy may shrink only 2% YoY, which would mark the end of the technical recession in Russia. All in all, the economy should contract by no more than 2.8% this year and return to steady growth in 2016.

[loganair] 23/7/2015 12:59

Russia is boosting its gold reserves as prices plunge:

MOSCOW: Russia's gold reserves rose to 41.0 million troy ounces as of July 1 compared with 40.2 million troy ounces a month earlier, the central bank said on Monday.

A rise of 800,000 t/ounces = 24.8 tons.

Russia has been steadily reducing its holdings of some other assets, including US Treasury bills.

Gold accounted for 13.3% of its total reserves at the end of June, compared to 9.7% in June 2014.

CBR First Deputy Governor Dmitry Tulin said in May that the central bank will boost its gold holdings as the asset is safe from "legal and political risks."

Tulin added, “As you know we are increasing our gold holdings, although this comes with market risks, the price of it swings, but on the other hand it is a 100% guarantee from legal and political risks."

[loganair] 23/7/2015 08:40

Margins remain healthy - EBITDA up 30% YoY in 2Q15. Magnit (JRS 2nd Largest Investment) released reasonably good 2Q15 esults yesterday, demonstrating a slight improvement in profitability over the previous year. Revenues increased 28% YoY to RUB236 bln ($4.5 bln) in 2Q15, largely in line with the trading update published earlier. Gross profit grew 29% YoY to RUB67.9 bln ($1.3 bln), implying a gross margin of 28.8%, up 0.4 ppt YoY. EBITDA rose 30% YoY to RUB28.2 bln ($536 mln), putting the EBITDA margin at 11.95%, a 0.2 ppt improvement YoY. Net income increased 25% YoY to RUB15.7 bln ($299 mln).


Magnit is stepping up its store opening plans as it looks to build on its low-price appeal to cash-strapped consumers.

Magnit's discount stores have proved relatively resilient in the current economic downturn as Russians, faced with a weak rouble and high inflation due to lower oil prices and Western sanctions, have increasingly favoured low-price stores.

It plans to open at least 1,350 convenience stores in 2015, the most ever for the company in a single year, Chief Executive Sergey Galitskiy said on Thursday, raising his forecast from six months ago of 1,200.

Magnit, which already has more than 10,700 stores, also lifted its forecast for cosmetics shop openings to at least 950 from 800, while keeping its guidance for new hypermarkets -- its least profitable store format -- at 90.

"The crisis for those who are aggressive means new opportunities," Galitskiy told analysts.

However, he was more cautious about the company's sales growth this year, forecasting a 26-28 percent increase compared with his earlier guidance for 28-32 percent growth.

"Unfortunately the number of new openings does not have such a big impact on our growth anymore, and it gets smaller day by day," he told analysts at an investor day.

"We see how the market reacted in April, in May and in June to this whole situation ... People started to save on food."

Inflation peaked in Russia in March, hitting 16.9 percent, and is still running at over 15 percent, although it has since slowed. Food inflation was down 0.4 percent in June, month-on-month, according to the state statistics agency.

Magnit also raised its guidance for its 2015 core profit margin to 10-11.2 percent, after it reached 11.95 percent in the second quarter.

[loganair] 20/7/2015 11:22

Russia's Beating the BRICS in 2015 on Turnaround Potential:

Which country would you invest in: a fast-growing economic powerhouse with a world-beating stock market or a tottering former superpower embroiled in a proxy war and heading for a recession?

If at the start of 2015 you had chosen the second, Russia, you would be walking away with risk-adjusted returns surpassing that of the first, China, and also every other BRICS country, according to data compiled by Bloomberg.

While that looked counterintuitive at the time, as plunging oil prices and a currency slump weighed on Moscow’s $456 billion market, the tables have turned in these seven months. Crude’s rebound from a six-year low boosted the appeal of Russian assets, while concern about pricey stocks led to a $4 trillion rout in China. Russia has the lowest valuation among its peers and can extend gains if political risks ease further, investors from GAM U.K. Ltd. to Prosperity Capital Management say.

“Our models are telling us to buy Russia,” Tim Love, investment manager at GAM, which oversees $130 billion of assets, said by phone on July 15. “There is a very strong turnaround potential. It’s an increasingly difficult call to get right because of politics. I’d be happy to pull the trigger in the next two to three months.”

In nominal terms, Russia’s benchmark Micex Index has advanced 18 percent this year, 5 percentage points lower than the Shanghai Composite Index. Still, a record drop in Russian volatility, combined with an increase in Chinese price swings, left returns adjusted for such fluctuations superior for Moscow by a factor of 1 to China’s 0.6, according to the data. That was also the best gain in the BRICS universe that includes the two countries, and Brazil, India and South Africa.

Mensis Horribilis:

Russia’s surge in fortunes presents a contrast with the events of December, when stocks tumbled almost 9 percent and the ruble sank to a record, prompting the central bank to raise interest rates to the highest in more than a decade. That marked the peak of turmoil that had begun with Russia’s annexation of Crimea in March and crude oil’s 48 percent annual plunge.

Since then, investors have calmed down about the country. Oil has stabilized above $55 a barrel and a cease-fire is holding, by and large, in eastern Ukraine since Valentine’s Day. A measure of expected price swings, as signaled by options prices, has more than halved to 29 percent, the steepest drop since at least 2006, the earliest date records go back to.

Russia continued to beat China in July. Shanghai has sunk to the bottom of the riskless-returns table and stayed there even after government intervention drove a rebound. Russia’s volatility gauge dropped to a one-year low on Friday.

Cheapest Market

Even after the first-half rally, Russian stocks are valued at less than half of their BRICS peers. The Micex trades at 5.9 times the projected earnings of its members, compared with the second cheapest gauge, Brazil’s Ibovespa, at 12.5. China, India and South Africa enjoy multiples of above 15.

“Most Russian stocks are fundamentally undervalued,” Mattias Westman, the founder of Prosperity Capital Management, which oversees about $2 billion in assets from former Soviet republics including Russia, said by phone Monday. “There is potential for further recovery.”

Russia’s economy, set to contract this year for the first time since 2009, may rebound 0.5 percent in 2016, a Bloomberg survey shows. European economic sanctions are also likely to be relaxed, as it won’t be “easy to convince everyone to prolong them” next year, Westman said.

Lingering Risks:

Still, even the most bullish investors aren’t discounting the potential risks of investing in Russia amid President Vladimir Putin’s continued standoff with Western powers over Ukraine and the pressure on oil prices from the imminent return of Iranian output to the oversupplied global market.

GAM’s Love, who plans to increase his 3.5 percent Russia exposure by buying stocks dependent on consumer demand, is waiting to do so for want of clarity on how the Ukraine conflict will be resolved. Others are holding back for signs foreign investors are returning to the market.

“The easy gains are over,” Anastasia Levashova, who helps manage about $350 million at Blackfriars Asset Management Ltd. in London, said by e-mail. “The volatility of the Russian market is low because its investor base and trading volumes have shrunk dramatically.”

The competition from the rest of BRICS is intensifying. While China has unleashed $483 billion of stock-buying power to prop up its market, India has seen foreign investors turn net buyers for the first time since April. So, cheaper valuations remain the key argument in favour of Russia for now, with Love calling the market “a spring.”

“You’ve got to continue pressing on the spring to keep the valuation low,” Love said. “It’s not where Russia should be.”

[loganair] 20/7/2015 11:13

As the BRICS countries continue their steady rise, now bolstered by their own institutions, investors are putting their thinking caps on and deciding where to bring their money first; meanwhile Bloomberg has offered a surprising answer: it is Russia, no matter what is said aloud.

“Our models are telling us to buy Russia,” the agency quotes Tim Love, investment manager at GAM UK Ltd, which oversees $130 billion in assets, as saying. “There is a very strong turnaround potential. It’s an increasingly difficult call to get right because of politics. I’d be happy to pull the trigger in the next two to three months.”

In nominal terms, Bloomberg explains, Russia’s benchmark Micex Index has advanced 18% this year, 4 percentage points less than the Shanghai Composite Index. Still, a record drop in Russian volatility, combined with an increase in Chinese price swings, has left returns adjusted for such fluctuations superior for Moscow by a factor of 1 to China’s 0.6, according to the data. That was also the best gain in the BRICS.

Russia’s stock, however, remains undervalued compared to that of other BRICS member states. The Micex trades at 5.9 times the projected earnings of its members, compared with the second cheapest gauge, Brazil’s Ibovespa, at 12.6. China, India and South Africa enjoy multiples of above 15.

“Most Russian stocks are fundamentally undervalued,” Bloomberg quotes Mattias Westman, founder of Prosperity Capital Management, which oversees about $2 billion in assets from former Soviet republics including Russia, as saying. “There is potential for further recovery.”

Its survey shows that Russia’s economy, set to contract this year for the first time since 2009, may rebound 0.5% in 2016. European economic sanctions are also likely to be relaxed, as it won’t be “easy to convince everyone to prolong them” next year, Westman said.

Cheaper valuations remain the key argument in favour of Russia for now, but Tim Love calls the market “a spring.”

“You’ve got to continue pressing on the spring to keep the valuation low,” he explained. “It’s not where Russia should be.”

[loganair] 14/7/2015 11:24

Sales up 24% YoY in June. Magnit (JRS 2nd Largest Investment) released a good trading update for June and 1H15 yesterday. Revenues rose 24.6% YoY to RUB78.5 bln ($1.4 bln), implying a 4.2 ppt slowdown in YoY growth relative to May. The deceleration was partially due to food deflation, as food prices dropped 0.4% MoM in June after rising 0.1% MoM in May. Sales at convenience stores were up 22.1% YoY to RUB58.6 bln ($1 bln); at hypermarkets – up 14.4% YoY to RUB13.3 bln ($240 mln); and at Magnit Family stores – up 82.5% YoY to RUB3.6 bln ($65 mln).


In my good opinion considering all the problems in Russia at the moment sales up 24% are excellent, any of the supermarket chains in the UK would love such growth figures.

[loganair] 08/7/2015 10:25

Falling oil exerted additional pressure on Russian market. The Russian market performed in line with its global counterparts as the RTS index lost 1.9%. Oil, after holding onto slight gains early in the day, returned into a downward trajectory, which negatively affected the ruble and, consequently, Russian stocks.

[loganair] 08/7/2015 10:11

ROAE back up to 12% in June. Sberbank (SBER RX – Buy) (JRS 2nd Largest Investment) published June RAS results yesterday. ROAE returned to double digits, reaching 12.2% in June and 10.4% in 2Q15 (up from 5.2% in 1Q15), though some support was provided by a tax release in April and the low 8% effective tax rate in June. Fees, which grew 34% MoM and 2% YoY (the first YoY growth recorded this year), were another big source of support for the bottom line. Trading income was also strong, though this was likely partly offset by additional FX loan provisions being created to compensate for the weakening ruble.

[loganair] 03/7/2015 16:34

Russian Railways’ announced that it is to launch a daily Moscow – St Petersburg – Tallinn service on July 10. RZD said it was ‘interested in organising stable international passenger traffic between Russia and Estonia’.

The service will replace the separate trains from Tallinn to St Petersburg and Moscow which Estonian private operator Go Rail suspended in May owing to a ‘significant decrease’ in Russian tourist traffic as a result of the ‘difficult economic and political situation in relations between Russia and the European Union’.

The new service will depart from Moscow at 21.20, calling at St Petersburg at 05.16 and arriving in Tallinn at 13.38. Services from Tallinn will start on July 11, leaving at 15.20 and arriving in St Petersburg at 23.07 and Moscow at 09.32.

The trains will include second class and third class berths and a compartment for passengers with disabilities.

[loganair] 26/6/2015 11:47

Russia chooses fiscal austerity - The government cuts defence spending and limits social expenditure … Yesterday, Finance Minister Anton Siluanov said that the government approved a draft federal budget for 2016-18. According to Siluanov, the government plans to cut defence expenditure by less than 10% and to increase social benefits below inflation. Pensions will be increased by 5.5% next year, by 4.5% in 2017, and by 4% in 2018. The government plans to return the currently frozen self-funded pensions back to non-government pension funds, which requires a RUB330 bln increase in the transfer to Russia’s Pension Fund next year. The government plans to raise RUB99 bln from privatization next year, while the planned proceeds from privatization in 2017-18 are negligible.

[loganair] 19/6/2015 17:16

Russia has passed the acute part of crisis, but not crisis itself — Sberbank CEO:

The difficult economic situation, in which we are in right now, is not over yet. It will continue throughout this year and part of next, Sberbank CEO German Gref said.

The difficult situation in Russia is not over and will continue in 2016, said Sberbank CEO German Gref in an interview with RBC television at the St. Petersburg International Economic Forum on Friday.

"The difficult economic situation, in which we are in right now, is not over yet. It will continue throughout this year and part of next. Most likely, there won't be such a sharp drop in production and GDP as before. As I said some time ago, the acute phase of the crisis has passed, but that does not mean that we have passed the crisis itself.

According to Gref, in order to achieve a sustainable growth path, "a lot of work is up head."

[loganair] 19/6/2015 14:05

The RTS index rallied 1.6% on gains in ruble-sensitive, domestically oriented stocks from the utilities and telecom sectors, which were in turn driven by a strengthening ruble. The St Petersburg International Economic Forum got underway yesterday, but has not yet delivered any significant developments. However, important news is expected from the forum today, as President Vladimir Putin is scheduled to give a speech.

[loganair] 17/6/2015 10:01

TheIndustrial output dropped 5.5% YoY in May - figures were worse than expected ... According to Rosstat data released yesterday, industrial production dropped 1.4% MoM in May after declining 6.5% MoM in April, deepening the YoY decline to negative 5.5% from negative 4.5% in April. Growth was again weaker than the market had expected, as the consensus according to Interfax forecasted a 4.6% YoY drop. We forecasted a 5.2% YoY drop. Industry is in the deepest slump since autumn 2009. Seasonally adjusted, industrial output dropped 0.6% MoM in May after dropping 1.6% MoM in April. Production was down 2.3% YoY in 5M15.

[loganair] 16/6/2015 11:13

BP's review of world energy supplies, published this month, estimated that Russian oil and gas reserves had jumped above 100 billion barrels for the first time, climbing to some 103 billion from 93 billion in the last review in 2013. This put it sixth in the global reserves league table.

Such an abundance makes it economically vital for major energy firms to maintain healthy ties with Moscow.

"Uncertainty is the rule of the game in this industry," the head of France's Total, Patrick Pouyanne, said this month. "We are in the long-term business. This is why at Total we are keen to maintain our commitment to Russia."

Western energy bosses have a lot at stake in Russia, with assets ranging from Shell's giant gas plant on the far eastern island of Sakhalin to BP's 20 per cent stake in Rosneft, responsible for a third of its global production.

"I would observe that Russian [energy] imports may not be as uncertain as they can appear," Dudley said this month when speaking about Europe's desire to cut dependence on Russian gas. "As well as Europe needing gas from Russia, Russia needs revenues from Europe."

The past year's sanctions have prevented Western companies from investing in the Russian Arctic, offshore and tight oil projects as well as from providing funding for over 90 days.

But onshore developments are still allowed and BP is looking to expand its portfolio in Russia by buying a stake in an east Siberian oil field from Rosneft for as much as US$800 million.

Van Beurden said Shell would be keen to boost capacity of the US$20 billion Sakhalin plant by a third, while Total is seeking ways to unlock investments into the US$30 billion Yamal gas plant.

[loganair] 16/6/2015 10:59

The Bank of Russia continued its daily purchases of foreign currencies to replenish the country's reserves on Thursday, central bank data showed today Tuesday.

The central bank, which reports its currency interventions with a lag of two working days, bought $200 million on Thursday. This takes interventions to up to $3.98 billion since May 13, the day when the central bank started buying foreign currencies in an effort to beef up its depleted reserves.

Though the central bank has said its purchases of foreign currencies aren't designed to cap the ruble, the interventions make it harder to bet on a stronger Russian currency.

In early trading Tuesday, the ruble was up 1% at 53.96 against the dollar, buoyed by a moderate rate cut overnight.

[loganair] 15/6/2015 11:51

The Central Bank of Russia (CBR) has cut the key interest rate by 100 basis points to 11.5 percent, saying inflation risks have weakened as the economy is cooling.

“Amid significant contraction in consumer demand and ruble appreciation in February-May 2015, consumer price growth continued to slow down. The regulator blamed the recent deceleration of consumer inflation on weak consumer demand, the appreciation of the ruble in February-May and the diminished effect of the ban on European food imports. Monetary pressure on inflation remains insignificant, as broad money growth is still fairly low.

According to the Bank of Russia forecast, given these factors annual inflation will fall to less than 7% in June 2016 to reach the target of 4% in 2017,” the bank said in a statement Monday.

The CBR added that it was ready to continue cutting the rate, but the scale of the cut will depend on inflation in the coming months.

This marks the fourth consecutive rate cut this year, which shows the regulator sees the inflation danger fading and the ruble having found its fair value.

Last week the weekly inflation rate in Russia reached zero, the first time since early August 2014.

[loganair] 12/6/2015 07:46

Long weekend ahead. Russian stocks rallied yesterday, driven primarily by the strong oil price and the ruble. The RTS index extended its gains and closed 1.6% higher, as the ruble strengthened by more than 2% towards the close, supported by the continued rally in Brent futures (to above $65/bbl).

The Russian Central Bank will decide on the key rate at its meeting on Monday. The Bloomberg consensus expects it to be revised down 1 ppt to 12.5%; however, we believe that the worrisome situation in the Russian economy could prevent the CBR from an aggressive rate cut and the rate will be cut by 50 bps to 13%.

Brent futures are declining slightly this morning and we believe that the Russian market will continue to be driven by the ruble. In addition, investors may prefer to stay on the sidelines ahead of the long weekend in Russia.

[loganair] 11/6/2015 11:04

Russian stocks rallied yesterday, driven primarily by the strong oil price and the ruble. The RTS index extended its gains and closed 1.6% higher, as the ruble strengthened by more than 2% towards the close, supported by the continued rally in Brent futures (to above $65/bbl).

The Russian Central Bank will decide on the key rate at its meeting on Monday. The Bloomberg consensus expects it to be revised down 1 ppt to 12.5%; however, we believe that the worrisome situation in the Russian economy could prevent the CBR from an aggressive rate cut and the rate will be cut by 50 bps to 13%.

Brent futures are declining slightly this morning and we believe that the Russian market will continue to be driven by the ruble. In addition, investors may prefer to stay on the sidelines ahead of the long weekend in Russia. We expect the RTS index to open 0.3% higher.

[loganair] 11/6/2015 11:00

Data shows consistently high sales growth - Sales up 29% YoY in May, at the same rate as in April. Yesterday, Magnit (JRS 2nd Largest Investment) published a good trading update for May 2015. Sales rose 28.7% YoY to RUB80.0 bln ($1.6 bln), growing at the same rate as in April. The market considers it a good result given that monthly food inflation contracted to 0.1% from 0.3% in April. Sales at convenience stores rose 26.4% YoY to RUB59.8 bln ($1.1 bln) and sales at hypermarkets increased 18.7% YoY to RUB13.9 bln ($274 mln), whereas sales in the Magnit family segment expanded 94.9% YoY to RUB3.7 bln ($73 mln).