Russian equity market dynamics
Last week, the Russian equity market rose, but by less than the broader emerging market (EM) index.
The lag was mainly due to a Russia-specific factor, with media headlines speculating that the EU will impose new sanctions over Alexei Navalny’s detention.
|MSCI Russia 10/40 TR in USD||1.6%||2.5%|
|MSCI EM index TR in USD||2.4%||10.8%|
|Due to Russia specific factors*||-1.1%||-3.4%|
|Due to difference in sector structure*||0.3%||-5.0%|
|* 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 12 February 2021
TKB Investment Partners (JSC) calculations; Bloomberg
|Upside/downside to fair price||4%|
|Data as of 12 February 2021
TKB Investment Partners (JSC) calculations
Main Russian news
The Central Bank of Russia (CBR) left its key rate at 4.25%. This is the fourth time in a row the regulator has left the rate unchanged. The decision was made on the back of inflation accelerating above the CBR’s forecast due to the recovery in demand at a time of limited product supply. The weakening of the rouble also added 1% to annual inflation. The regulator signaled it is set to end the rate-cut cycle, but said that it was too early to discuss rate hikes. The bank also raised its annual inflation forecast for 2021 from 3.5%-4.0% to 3.7%-4.2%. It expects inflation to peak in February-March at 5.5% and decline thereafter. According to the CBR’s governor, Elvira Nabiullina, the Russian economy may return to its pre-pandemic level by the end of 2021. Previously, recovery to that level was expected only by mid-2022.
Rosstat is due to publish macroeconomic figures for January 2021.
Author: Marina Tsutskiridze, Junior Investment Specialist
Sources: CBR, Vedomosti, Bloomberg, TKB Investment Partners (JSC); February 2021Russian Equities Weekly_15 February_2021