Russian Equities Weekly 16-20 November, 2020: Russia outperforms EMs for the third week running

Russian equity market dynamics

Last week, the Russian equity market outperformed the broader emerging markets (EM) index. This was mainly due to Russia-specific factors, such as the rouble strengthening, which likely occurred on the back of foreign investors’ increased interest in local bonds.

  Week YTD
MSCI Russia 10/40 TR in USD 2.7% -10.9%
MSCI EM index TR in USD 1.8% 10.6%
Excess return 1.0% -21.5%
Due to Russia specific factors* 1.0% -3.4%
Due to difference in sector structure* 0.0% -18.1%
Key commodities**
Oil 5.6% -33.3%
Gold -0.8% 23.8%
RUB/USD 1.3% -18.6%
RUB/EUR 1.8% -22.9%
* See details of methodology in the end of the report

** Energy weight in the MSCI Russia 10/40 is 33%, Gold producers weight in the index is 9% (weights are as at the end of October 2020)

Data as of 20 November 2020

TKB Investment Partners (JSC) calculations; Bloomberg

Upside/downside to fair price 12%
Data as of 20 November 2020
TKB Investment Partners (JSC) calculations

Main Russian news

Russia’s key macroeconomic indicators were mixed in October. Industrial production worsened due to a slowdown in manufacturing. The slight improvement in the extraction segment was not enough to compensate. On the other hand, retail sales improved on the previous month but have still declined on an annualised basis in both the food and non-food segments. Rosstat published real wage growth data for September which showed an increase of 2.2% YoY.

Indicator Growth YoY
September 2020 October 2020
Industrial production -3.6%* -5.9%
Manufacturing 0.5%* -4.4%
Extraction -9.4%* -8.8%
Retail sales -3.0% -2.4%
Food -4.6% -3.6%
Non-food -1.3% -1.1%
Real wages 2.2% Not available

*Data revised by Rosstat

Author: Marina Tsutskiridze, Junior Investment Specialist

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

Russian Equities Weekly_23 November 2020_STE
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