Russian Equities Weekly 24–28 August, 2020: The wave of the global optimism has lifted not all the ships

Russian equity market dynamics

Last week, the Russian equity market underperformed the broader emerging markets (EM) index. The EM were supported by US Federal Reserve approval of a new, softer inflation policy. The easing was taken by investors as a sign that the key rate will be kept at around 0% for the long term. At the same time Russian market relative performance was pressured by both country-specific and sector-specific factors:

  • Concerns about the risk related to Russia potential interference in Belarus’ affairs continue to weigh on the Russian market. President Putin announced his readiness to support the Belarusian government with the help of a created law enforcement reserve in case of extremist actions such as arsons, looting or attempting to seize government buildings.
  • The consumer discretionary sector is absent from the MSCI Russia 10/40 index. Thus, the EM consumer discretionary sector rising by 7% had the largest negative impact on the Russian market relative performance from the sector-specific perspective.
  Week YTD
MSCI Russia 10/40 TR in USD -0.1% -10.9%
MSCI EM index TR in USD 2.8% 2.3%
Excess return -2.9% -13.2%
Due to Russia specific factors* -1.6% -2.0%
Due to difference in sector structure* -1.3% -11.1%
Key commodities**
Oil 2.7% -32.7%
Gold 1.7% 29.2%
RUB/USD 1.0% -16.3%
RUB/EUR 0.0% -21.5%
* See details of methodology in the report
** Energy weight in the MSCI Russia 10/40 is 32%, Gold producers weight in the index is 11% (weights are as at the end of July 2020)
Data as of 28 August 2020
TKB Investment Partners (JSC) calculations; Bloomberg


Upside/downside to fair price 12%
Data as of 28 August 2020
TKB Investment Partners (JSC) calculations

To watch…

Rosstat is due to post inflation figures for August 2020 later this week.

Author: Aleksandra Kuznetsova, Junior Investment Specialist

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

Russian Equities Weekly_31 August 2020
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