Russian Equities Weekly 30/09–04/10/2019: Inflation continues to slow

  Week YTD
RTS Total return (TR) in USD -2.3% 30.4%
MOEX index TR in RUB    
Composite -2.0% 20.7%
Blue chip -2.0% 22.7%
Small and mid-cap -2.7% 7.2%
MOEX sector indices TR in RUB
Oil & Gas -1.8% 17.3%
Metals & Mining -2.1% 8.4%
Power Utilities -2.2% 21.5%
Consumer Goods -2.7% 6.5%
Financial Services -3.1% 19.8%
RUB/USD 0.1% 7.1%
RUB/EUR 0.0% 11.9%

Data as of October 4, 2019
TKB Investment Partners (JSC) calculations; Bloomberg

Russian equity market dynamics

Last week, the Russian equity market underperformed other emerging markets (EM). The RTS lost 2.3% while the MSCI EM index contracted by 0.5% (all figures in USD terms). Weak PMI data released last week and increasing concerns about global slowdown dragged down the global markets. Additionally, falling oil prices put pressure on the Russian market. Brent fell by 4.6% on news that Saudi Arabia had managed to restore its oil production to the pre-attack level.

The oil & gas sector outperformed the market. This was mainly due to Surgutneftegas, whose share price rose by 1.1% in rouble terms, despite the lack of fundamental news.

The financial services sector was the worst performer of the week, dragged down mainly by VTB and Moscow Exchange. There was no company-specific news to justify such a performance.

Main Russian news

Inflation in Russia has continued to slow. The consumer price index (CPI) slipped to 4.0% YoY as at the end of September from 4.3% YoY at the end of August. Inflation is thus at its lowest level since December 2018. Inflation slowed in the food, non-food and services sectors. Non-food inflation fell to 3.4% YoY vs 3.5% YoY. Food inflation slipped to 4.6% YoY vs 5.0% YoY. Services inflation fell to 4.0% YoY vs 4.4% YoY.

The Ministry of Economic Development believes inflation could slow further, to 3.2% YoY by the end of 2019. This is the third time this year that the Ministry has downgraded its inflation forecast for 2019. The forecast for 2020 was also revised down, to 3% YoY from 3.8%.

To watch…

There is no significant news due this week.


Author: Aleksandra Kuznetsova, Junior Investment Specialist

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

Russian Equities Weekly 7 October 2019
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