Oil & Gas companies outperformed last week. Positive performance from Novatek, Lukoil, and Rosneft further supported this sector. Their shares rose by 2.6%, 2.3%, and 1.8% respectively, in rouble terms.
The financial sector lagged behind the other sectoral indices. Safmar Financial Investment was the weakest in the sector, dropping by 13.2%. Similarly, VTB Bank’s shares lost 3.7%, Moscow Exchange shares fell by 2.2%.
| Week | YTD | |
| RTS Total Return (TR) in USD | 1.4% | 13.9% |
| MOEX index TR in RUB | ||
| Composite | 0.6% | 5.5% |
| Blue Chip | 0.8% | 6.4% |
| Small and mid-cap | 1.3% | 4.1% |
| MOEX sector index TR in RUB | ||
| Financial Services | 1.6% | 1.8% |
| Metals & Mining | 0.3% | 1.7% |
| Power Utilities | -0.5% | 3.8% |
| Oil & Gas | -0.6% | 5.2% |
| Consumer Goods | -2.1% | 8% |
| FX | ||
| RUB/USD | 0.3% | 7.1% |
| RUB/EUR | 0.7% | 8.7% |
Data as of March 22th, 2019
Sources: TKB Investment Partners (JSC) calculations; Bloomberg
Main Russian news
Macroeconomic indicators improved in February.
Industrial production growth surged by 4.1% YoY, which exceeded by far the market expectation of 1.5% YoY. This could largely be accredited to two key industries: manufacturing and extraction. Oil production growth in February accelerated to 3.5% YoY in comparison with 3.1% YoY in January. Increases in gas production growth were more significant, at 4.7% YoY vs 2.5% YoY in January. Retail sales growth also increased, rising in the non-food segment, while performance levels in the food segment fell in YoY terms. Preliminary estimates of real wages growth showed a decline, however Rosstat could alter this result after having received their final data for the reporting period. Furthermore, the State statistics service suspended the monthly publication of real disposable income and will now only release quarterly figures.
| Indicator | Growth YoY | |
| January 2019 | February 2019 | |
| Industrial production | 1.1% | 4.1% |
| Manufacturing | -1.0% | 4.6% |
| Extraction | 4.8% | 5.1% |
| Retail sales | 1.6% | 2.0% |
| Food | 2.1% | 1.7% |
| Non-food | 1.2% | 2.4% |
| Real wages | 1.1%* | 0.7%** |
* Data was revised by Rosstat
** Preliminary data
The Central Bank of Russia (CBR) announced a cut in its inflation forecast for this year, down to 4.7%-5.2% from the previous 5.0%-5.5%. The regulator also lowered its peak forecast for March-April to 5.5% from the 5.5%-6.0% range it was expecting before. The CBR noted that it maintained the key rate at 7.75%. The CBR believes that the key rate increase made last year will be sufficient to bring the annual inflation back to the target rate of 4% in the first half of 2020.
To watch…
Rosseti and Akron are due to publish full-year 2018 IFRS results
Author: Marina Tsutskiridze, junior investment specialist
Sources: Vedomosti, Bloomberg, Rosstat, cbr.ru, TKB Investment Partners (JSC); March 2019
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