Russian Equities Weekly 22-26/04/2019: Down together with EM

The oil and gas sector outperformed last week, largely due to the stocks of Tatneft and Novatek. Novatek shares benefited from positive financial results for the first quarter of 2019 and signed an agreement on the acquisition of two Chinese companies with a 20% participation interest in the Arctic LNG 2 project. Equally, Tatneft shares rose after Expert RA rating agency confirmed the credit rating of Tatneft to be at the highest level of ruAAA.

Financials underperformed for the second consecutive week due to Sberbank and VTB, whose share prices fell by 4.05% and 1.1% respectively.

  Week YTD
RTS Total return (TR) in USD -1.1% 17.0%
MOEX index TR in RUB    
Composite 0.0% 8.5%
Blue chip 0.0% 10.1%
Small and mid-cap 0.0% 5.6%
MOEX sector indices TR in RUB    
Oil & Gas 1.7% 5.1%
Consumer Goods 1.5% 6.3%
Power Utilities 0.4% 9.3%
Metals & Mining -0.1% 3.2%
Financial Services -1.7% 9.5%
RUB/USD -1.3% 7.5%
RUB/EUR -0.7% 10.4%

Data as of April 26, 2019
TKB Investment Partners (JSC) calculations; Bloomberg

Main Russian news

The Central Bank of Russia (CBR) is keeping the key rate at 7.75%, and anticipates the next rate cut to take place in Q2 or Q3 of 2019. The regulator noted that the annual inflation has passed its peak and started to slow down. The CBR no longer feels the VAT rise at the beginning of the year is a risk for inflation and forecasts annual inflation to return to 4% by the first half of 2020.

Russian oil exports to Europe through the Druzhba pipeline were halted over quality concerns. The issue arised when a non-listed private oil producer, which used the same control point terminal as the largest oil transporting company Transneft, contaminated over 1 million tonnes of oil in the pipeline with organic chloride. This led to a shutdown of the Druzhba pipeline, the main oil supply channel to Europe. The Russian authorities see the solution in mixing the contaminated oil with regular oil to lower the chloride level. Russia is aiming to resolve the situation in less than a fortnight, but until then may rely on oil exports by sea. We do not anticipate any lasting effects on the Russian economy.

To watch…

Rosstat is due to publish macroeconomic indicators for April 2019

Author: Marina Tsutskiridze, Junior Investment Specialist

Sources: Rosstat, Vedomosti, Bloomberg, TKB Investment Partners (JSC); April 2019


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