June turned to be rather boring in the financial markets; it was determined by the activity decay practically in all segments of the market due to the beginning of summer season.

The main events anticipated by investors were the ECB meetings at the beginning of the month, at which stimulating monetary measures to decrease the inflation and to accelerate the economy growth in the euro area had to be announced. However, as this event had already been taken into account by the market and no surprises followed, there was no strong reaction.

During several days the securities markets continued to show growth by inertia that was started in the second half of May, however, afterwards they entered a long-lasting phase of consolidation. Local news and macroeconomic indicators mostly influenced the stock markets in certain countries. In this case, the markets of emerging countries looked better due continuous inflow of investors’ funds. The US securities market also showed positive growth in the environment of continuously coming positive macroeconomic news. In turn, the European markets showed negative dynamics, as economic indicators still caused anxiety in the future outlook. Mostly, it concerned France with the index of business activity (PMI) lower than 50, which evidenced the moderation in economic growth. Besides, the accusation of U.S. Department of Justice against one of the largest banks, BNP Paribas, and following the accusation penal sanctions badly influenced the index of the banking sector, which has considerable weight in the total index of STOXX Europe 600. As for the rest, it looked as if the main issues that everyone was interested in were whether the referee had to announce a penalty shoot out or it was offside position when they scored.

Manager of the stock funds did not take active actions during this month. Our assumption regarding the results of the ECB meetings about a possible correction under the ‘buy rumors, sell facts’ principle was not proven true, but also unrestrained growth did not take place, in other words, the situation of Status Quo remained. In these uncertain circumstances, we continued to adopt a wait-and-see attitude, as before we believed the risk of correction to be high with the reference to a relative „overbought” market.

In the global bond market positive moods were prevailing. The Russian Eurobonds market continued to show growth, however, not as impressive as it was in the previous month. Considering the fact that political tension between Russia and Ukraine did not decline and negotiations on the payment for Russian gas ended in nothing, the growth of Russian Eurobonds was ensured, firstly, by positive news from the global bond markets, secondly, by investors who continued to take a lead from the idea of the Russian market underestimation.

In the rhetoric of the leaders from some western countries possible new economic sanctions against Russia were mentioned, but the market considered this probability as rather low. The primary issues of quasi sovereign issuers of the banking sector (Sberbank of Russia, Vnesheconombank, Gazprombank) were in good demand, many times overtaking supply.

The market of corporate bonds showed stable growth, firstly, due to the decrease of risk premium (spread) against the yield of government bonds: the Head of U.S. FRS confirmed again the plans of retaining low rates thus strengthening positive moods among investors. In the bond sector denominated in euro, a long-awaited decision from the ECB about the decrease of key basic rate by 10 basis points, as well as the implementation of long-term target financing (TLTRO) to support banking financing of households and non-financial corporations gave an additional impulse to price growth. As a result, the rate of long-term government bonds in Germany decreased to a new minimum of the last 12 months.

The government bond market of emerging countries entered the consolidation phase after rather intensive growth in the previous months. Strong movements in bond prices occasionally took place in some countries (to a greater extend it concerned Iraq, Argentina, to a lesser extend Russia and Ukraine), but in general it did not affect the general market. As a result, bond prices in the majority of countries remained on the existing levels.

In a current situation we are taking neutral attitude. The potential of further decrease in the yield of US and German long-term government securities looks limited as the FRS continues to decrease the volume of debt-purchase programme (QE), and positive outcome gained from the stimulating measures announced by the ECB has been already accounted by investors. In its turn, in June Russian Eurobonds returned to the price level before the conflict escalation with Ukraine in March. Therefore, in the nearest future, in both corporate and government bonds global market we do not expect current high price growth to be retained. In this connection, we keep the strategy to invest in bonds with high coupon yield and issuers with reliable credit profiles. Responding to the current market situation, we are considering a possibility to fix yield on some, to our mind, overpriced securities.