Russian Equities Weekly 25-29 January, 2021: IMF raises growth forecast for Russian economy

Russian equity market dynamics

Last week, the Russian equity market declined, but by less than the broader emerging markets (EM) index.

This was due to both Russia-specific factors and a difference in sector structures:

  • Russia-specific factors: The market corrected somewhat after previous strong underperformance as no serious consequences of the public protests over Navalny’s imprisonment materialised
  • Difference in sector structures: The fact that the EM index’s IT sector declined by 7% contributed to the Russian market’s relative performance[1].
  Week YTD
MSCI Russia 10/40 TR in USD -3.5% -3.0%
MSCI EM index TR in USD -4.5% 3.1%
Excess return 0.9% -6.1%
Due to Russia specific factors* 0.4% -1.7%
Due to difference in sector structure* 0.5% -4.3%
Key commodities**
Oil 0.2% 7.2%
Gold 0.6% -1.3%
RUB/USD -0.8% -2.4%
RUB/EUR 0.0% -1.8%
* See details of methodology in the end of the report

** Energy weight in the MSCI Russia 10/40 is 36%, Gold producers weight in the index is 9% (weights are as at the end of January 2021)

Data as of 29 January 2021

TKB Investment Partners (JSC) calculations; Bloomberg

Upside/downside to fair price 9%
Data as of 29 January 2021
TKB Investment Partners (JSC) calculations

Main Russian news

The International Monetary Fund (IMF) has improved its outlook for the Russian economy. The organisation expects Russia’s GDP to grow by 3.0% vs. 2.8% predicted earlier, and by 3.9% in 2022 vs. 2.3% forecast in October. The IMF says the upgrade reflects the positive effects of the onset of vaccination. In addition, the IMF forecasts average crude oil prices for 2021 at USD 50 per barrel. The October forecast had estimated that oil prices would average USD 46.7 per barrel in 2021.

Russia’s key macroeconomic indicators were mixed in December. Industrial production improved relative to the figures for November. While extraction slowed, the manufacturing segment accelerated both on a month-to-month annualised basis. Retail sales slowed in both the food and non-food segments. Rosstat published real wage growth data for November, which showed a slight increase of 0.2% YoY.

Indicator Growth YoY
November 2020 December 2020
Industrial production -1.5%* -0.2%
Manufacturing 2.9%* 4.4%
Extraction -7.5%* -8.5%
Retail sales -3.1% -3.6%
Food -4.3% -4.5%
Non-food -1.7% -2.6%
Real wages 0.2% Not available

*Data revised by Rosstat

To watch…

Rosstat is due to publish inflation figures for January later this week.


Author: Marina Tsutskiridze, Junior Investment Specialist

Sources: Rosstat, IMF, Vedomosti, Bloomberg, TKB Investment Partners (JSC); February 2021

[1] Russian market sector structure implies underweight position in IT

Russian Equities Weekly_1 February_2021
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