Last week, the Russian equity market underperformed the other emerging markets (EM).

  Week YTD
RTS Total return (TR) in USD -2.5% -28.5%
MOEX index TR in RUB
Composite -1.8% -14.8%
Blue chip -1.6% -17.4%
Small and mid-cap -1.9% -12.0%
MOEX sector indices TR in RUB
Oil & Gas -0.5% -23.2%
Metals & Mining -1.3% 7.9%
Power Utilities -1.5% -4.5%
Consumer Goods -3.1% -6.7%
Financial Services -4.9% -17.3%
FX
RUB/USD 0.0% -15.7%
RUB/EUR 0.2% -12.6%
Data as of May 15, 2020
TKB Investment Partners (JSC) calculations; Bloomberg

Russian equity market dynamics

Last week, the Russian equity market underperformed the other emerging markets (EM). The RTS index lost 2.5%, while the MSCI EM index lost 1.2% (all figures in USD terms). Fears regarding a second wave of the COVID-19 pandemic and pessimistic remarks from the Fed negatively affected developing markets, including Russia. Russian equities came under additional pressure from profit-taking following earlier gains.

The oil & gas sector outperformed the broader market, mainly due to Surgutneftegaz, whose share prices rose by 7.9% in rouble terms, despite the lack of market-moving news.

The financial services sector was the worst performer overall, mostly due to Moscow Exchange and Sberbank, whose shares declined by 10.6% and 6.2%, respectively, in rouble terms. Moscow Exchange’s shares fell as a consequence of the dividend cut off date. Sberbank underperformed despite the lack of fundamental news.

Main Russian news

President Putin announced new measures to support the economy. Measures include a new credit line to reduce unemployment in companies in those sectors worst hit by COVID-19. The loan can be used for staff salary payments and for refinancing salary loans that have already been taken. For businesses that retain at least 80% of their staff, half of the loan and interest will be written off. For businesses that retain 90% of their employees, the loan and interest cost will be fully written off. The loan matures on 1 April 2021. Mr Putin also announced that self-employed people’s 2019 income tax will be refunded.  Moreover, families with children will receive subsidies, and medical workers will receive financial compensation. Mr Putin added that the government’s plan for economic recovery and growth will be worked out fully by 1 June 2020.

To watch…

Rosstat is due to post a preliminary report on Russia’s GDP performance for Q1 2020 and industrial production figures for April 2020.

 

Author: Aleksandra Kuznetsova, Junior Investment Specialist

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

Russian Equities Weekly 18 May 2020
Categories: Market Pulse