Russian Equities Weekly 1–5 June, 2020: Inflation slowed slightly in May

  Week YTD
RTS Total return (TR) in USD 5.4% -16.2%
MSCI EM index TR in USD 7.8% -9.3%
MOEX index TR in RUB    
Composite 2.1% -7.4%
Blue chip 2.4% -10.0%
Small and mid-cap 4.5% -2.5%
MOEX sector indices TR in RUB
Oil & Gas 4.3% -16.5%
Financial Services 3.8% -6.2%
Consumer Goods 3.2% 1.8%
Power Utilities 1.7% 9.6%
Metals & Mining -5.0% 8.6%
RUB/USD 2.1% -9.7%
RUB/EUR 0.8% -10.4%
Data as of June 5, 2020
TKB Investment Partners (JSC) calculations; Bloomberg

Russian equity market dynamics

Last week, the Russian equity market rose, but by somewhat less than the broader emerging markets (EM) index. The RTS index gained 5.4%, while the MSCI EM index rose by 7.8% (all figures in USD terms). Markets were supported by unexpectedly positive US unemployment data: the latest US jobs report showed a gain of 2.5 million new jobs versus expected losses of 7.5 million.

The oil and gas sector outperformed the broader market, mainly thanks to Tatneft, Rosneft and Novatek, whose share prices rose by 7.1%, 6.8% and 5.5%, respectively. The companies benefited from oil prices rising by 12%.

The metals and mining sector was the worst performer overall, mostly due to Polymetal, Polyus, and Norilsk Nickel, whose shares declined by 12.6%,  12.2%, and 7.7%, respectively. Polyus and Polymetal shares came under pressure from falling gold prices. Norilsk Nickel contracted on news that an accident at one of its plants had cause a massive oil spill into a river.

Main Russian news

Inflation in Russia slowed slightly in May. The consumer price index (CPI) declined to 3.0% YoY at the end of May from 3.1% YoY at the end of April. Food inflation slowed to 3.3% YoY from 3.5%, while non-food inflation remained at 2.8% YoY. Services inflation rose to 3.0 % YoY from 2.9% YoY in April.  The governor of the Central Bank of Russia (CBR), E. Nabiullina, said inflation is falling somewhat faster than was expected. She also noted that data on both the economy and inflation confirms the view that there is significant room for lowering the CBR’s key rate, and hinted at the possibility of a 100bp cut at the bank’s monetary policy meeting on 19 June.

To watch…

There is no significant news due this week.


Author: Marina Tsutskiridze, Junior Investment Specialist

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

Russian Equities Weekly 8 June 2020_STE
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