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Russian Equities Weekly 17–21/02/2020: Coronavirus continues infecting markets

  Week YTD
RTS Total return (TR) in USD -0.7% -1.3%
MOEX index TR in RUB
Composite 0.3% 2.3%
Blue chip 0.1% 0.2%
Small and mid-cap -0.5% 13.5%
MOEX sector indices TR in RUB
Metals & Mining 2.4% 10.0%
Power Utilities 0.3% 21.1%
Oil & Gas -0.1% -3.9%
Consumer Goods -0.2% 6.5%
Financial Services -0.4% 6.3%
FX
RUB/USD -0.6% -3.4%
RUB/EUR -0.7% 0.0%
Data as of February 21, 2020
TKB Investment Partners (JSC) calculations; Bloomberg

Russian equity market dynamics

Last week, the Russian equity market declined by less than the other emerging markets (EM). The RTS index contracted by 0.7%, while the MSCI EM index lost 2.0% (all figures in USD terms). In broad terms, many emerging markets, including Russia, continued to be hit by the coronavirus outbreak. The MSCI EM index was affected more severely as it overweighs some sectors that have been hit harder by coronavirus fears. For example, the MSCI EM IT index contracted by 4%, which put pressure on the MSCI EM index, of which 16% is comprised of IT companies, whereas the Russian index has no IT sector.

The metals & mining sector outperformed the broader market, mainly driven by Polymetal and Polyus, whose shares rose by 6.5% and 6.3%, in rouble terms, respectively. Both companies rose on the back of increasing gold prices, as investors turned towards gold as a safe haven asset in the face of coronavirus fears.

The financial sector lagged the wider market. The worst performers were TCS Group and Moscow Exchange, whose share prices fell as a result of a correction after earlier growth.

Main Russian news

Russia’s key macroeconomic indicators were mixed in January. The decline in industrial production was due to a slowdown in both the manufacturing and extraction sectors. Retail sales rose in both the food and non-food segments, and hit their highest yearly growth rate since December 2018. Rosstat published real wage growth data for December, which rose to 6.9% YoY vs. 2.7% YoY in November.

Indicator Growth YoY
December 2019 January 2020
Industrial production 1.7%* 1.1%
Manufacturing 4.0%* 3.9%
Extraction 0.5%* -0.4%
Retail sales 1.9% 2.7%
Food 1.8% 2.9%
Non-food 2.1% 2.5%
Real wages 6.9% not available
* Data was revised figures from Rosstat

The Ministry of Economic Development said Russia’s GDP growth slowed to 1.6% YoY in January 2020 from 2.3% YoY in December 2019. The main reasons given were sluggish activity in the construction and extraction sectors. The lower levels of oil, natural gas and coal extraction were accompanied by lower freight turnover in the transportation sector.

To watch…

There is no significant news to follow this week.

 

Author: Aleksandra Kuznetsova, Junior Investment Specialist

Sources: Rosstat, Bloomberg, TKB Investment Partners (JSC); February 2020

Russian Equities Weekly 25 February 2020
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