Russia is much better prepared for a drop in oil prices now than it was in 2014, 2008 or 1998. There is no currency targeting, net debt is close to zero, budget is in a surplus and budget rule protects Russia from oil price drop all the way down to USD 42 bbl level. This is the first time in the midst of a significant drop in oil prices that the yield on Russian Eurobonds denominated in US dollars has risen slightly. There has only been a 30bp rise in Russian state Eurobond yields to maturity since the end of last week (1). Russian equity market fundamentals have not deteriorated materially on the back of the recent oil price drop. Expected average dividend yields are in double-digit figures. Expected inflation is around 4% even allowing for the impact from rouble depreciation since the start of the year. This leaves the Central Bank of Russia (CBR) room for key rate cuts over the next two to three years.
On 16th of January 2020, the President of Russia Vladimir Putin announced Mikhail Mishustin as the new prime minister of Russia. Since 2010, Mishustin headed the Federal Tax Service. During his tenure on this position, Russia became one of the world leaders in terms efficiency of tax service. Russian economy is likely to surprise on a growth side if achievements of Mishustin in his new role will be comparable to what he achieved during 10 years in the tax service.
Three types of road representing the global equity market Imagine the various possible movements of the global equity market as types of road. * Options with low carbon footprint Let’s assume that a bumpy forest road is the most likely scenario. There are many uncertainties ahead and likely large perceptual swings concerning future economic growth. […]
On 1 August 2019, the US imposed new sanctions against Russia. It was the 54th time that new sanctions from the US and the EU have been brought to bear since March 2014. Over 1-2 August, Russian equities contracted by 5.7% vs. a 3.2% drop in the MSCI EM index (all figures in US dollar terms). Is the latest round of sanctions a game-changer for Russia?