Driving market volatility
9 Aug, 2011 16:15
With a volatile days trade seeing the MICEX add nearly 1% in Moscow Business RT spoke with Aleksandr Krapivko, Senior Portfolio Manager at Renaissance Asset Management the drivers of market behaviour.
RT: The markets are making gains after slumping early in the day – could this be the turning point?Aleksandr Krapivko: Well actually that is a question that I would like to know the answer.Yesterday a lot of people were all thinking the same.But today we had some signs of capitulation and margin calls, and that is why if the U.S. will not provide us with the negative surprises we can be higher tomorrow.But what will be the situation next week that will be a good question again.RT: Are we going to see the same levels of volatility in the upcoming days?AK: It seems to me that the answer is yes.Because from the beginning of the year the market has had practically no volatility and we have had only in the last week moves of 3, 4, 5%.And I am pretty sure that this situation will continue for at least one more week.RT: Tonight there will be a meeting of the Federal Open Markets Committee in the United States, which Fed Chairman Ben Bernanke will address.What do you hope will come out that?AK: Not only me but a lot of people are expecting that Mr Bernanke will hint for the possible quantitative easing 3, but the most probably scenario is that he will announce the programme of US Treasuries buy backs on the long end of the curve.This is the basics that the market is expecting.But if they will provide some more the market will be more happy.RT: It seems that before at these Fed meetings the traders did not pay so much attention as they do now.Is that true?AK: Actually it seems to me that, especially today, this attention is really high, because actually Bernanke isn’t supposed to tell anything from this meeting.But he might now have to.RT: During the day we've seen that the precious metals were trading mixed. Why is that?AK: I think that gold is on all time highs and before this meeting people want to have some profit, because if there will be some positive comments from Bernanke and the market will reverse with positive side, maybe gold will be sold off a bit.But just for a bit I think.RT: Do you think there are any safer assets available except for gold and cash?AK: It is really difficult to find right now actually because both Euro and dollar are looking really weak now, and they are weak for fundamental reasons.That’s why people are chasing gold and Swiss Franc.Maybe Japanese Yen and Singapore dollar.But you know the capacity of these currencies is not enough to make everybody happy. RT: What is your outlook for energy prices?AK: The situation is not that simple here because on the oil market, especially on the WTI market, there are a lot of speculative positions which were built during the Libyan crisis.And the net long of so called non commercial players is still near the all time high.At one moment of time these positions will be unwound.