Last week, the Russian equity market outperformed other emerging markets (EM). The RTS gained 2.4%, while the MSCI EM index rose by 1.3% (all figures in USD terms). Optimism on global financial markets regarding apparent progress in the trade Sino-US negotiations pushed investors towards riskier investments, which supported Russian equities.

  Week YTD
RTS total return (TR) in USD 2.4% 45.4%
MOEX index TR in RUB    
Composite 2.0% 32.0%
Blue chip 2.2% 35.5%
Small and mid-cap 1.7% 9.8%
MOEX sector indices TR in RUB
Metals & Mining 4.0% 15.3%
Consumer Goods 3.0% 6.9%
Oil & Gas 1.2% 32.0%
Financial Services 1.0% 25.5%
Power Utilities -0.8% 22.9%
FX    
RUB/USD 0.5% 8.9%
RUB/EUR 0.0% 11.9%
Data as of November 1, 2019

TKB Investment Partners (JSC) calculations; Bloomberg

Russian equity market dynamics

Last week, the Russian equity market outperformed other emerging markets (EM). The RTS gained 2.4%, while the MSCI EM index rose by 1.3% (all figures in USD terms). Optimism on global financial markets regarding apparent progress in the trade Sino-US negotiations pushed investors towards riskier investments, which supported Russian equities.

The metals & mining sector outperformed the broader market. This was mainly due to Alrosa, Norilsk Nickel and Polymetal, whose shares rose by 7.7%, 5.7% and 4.7%, respectively, in rouble terms. Alrosa rose despite the lack of market-moving news. Norilsk Nickel was supported by rising nickel prices. Polymetal rose despite the lack of fundamental news.

The power utilities sector was the worst performer of the week, dragged down mainly by IDGC Volga, whose stock underperformed after its weak RAS report for the last nine months. The company’s net income shrank by 52% YoY from January to September 2019.

Main Russian news

The Prime Minister of Russia, D. Medvedev, instructed to boost economic growth to 3% from 2021 onwards. The Ministry of Economic Development estimates that GDP growth for 2019 will be 1.3%. The businesses will be partially released from the excessive regulative pressure. Medvedev instructed the Ministry of Finance and The Ministry of Economic Development to agree on ways to stimulate private investment with the help of the National Welfare Fund. By December, the Ministries will co-produce a plan to support industrial organisations and their access to debt and equity financing.

To watch…

Rosstat is due to publish inflation figures for October 2019.

Author: Aleksandra Kuznetsova, Junior Investment Specialist

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

Categories: Market Pulse