Russian equity market dynamics
Last week, the Russian equity market outperformed the broader emerging market (EM) index by 0.2%.
The relative outperformance was mainly due to the differences in the two indices’ sector structures. The EM index’s consumer discretionary sector decline by 6%, which contributed to the Russian market’s relative outperformance.
|MSCI Russia 10/40 TR in USD||-2.0%||1.3%|
|MSCI EM index TR in USD||-2.2%||1.6%|
|Due to Russia specific factors*||-0.2%||-1.6%|
|Due to difference in sector structure*||0.4%||1.3%|
|* See details of methodology in the end of the report
** We use Brent Oil and LBMA Gold price data, in USD terms. Energy weight in the MSCI Russia 10/40 is 36%; gold producers’ weight in the index is 9% (as at the end of February 2021)
Data as of 26 March 2021
TKB Investment Partners (JSC) calculations; Bloomberg
|Upside/downside to fair price||7%|
|Data as of 26 March 2021
TKB Investment Partners (JSC) calculations
Main Russian news
The US increased its imports of Russian crude oil and petroleum products in 2020. According to the Energy Information Administration (EIA), oil and petroleum products from Russia to the US in 2020 hit their highest level since 2011, amounting to 6.9% of all US oil imports vs. 5.7% in 2019. Annual figures show that Russia became a top-3 supplier of crude oil and petroleum products to the US last year, after Canada and Mexico, overtaking Saudi Arabia. The increase in supplies from Russia resulted from the US sanctions imposed on Venezuela and the decrease in Saudi Arabia’s oil exports to the United States to their lowest level since 1985. The EIA forecasts that the US will increase its net imports of crude oil from its 2020 average of 2.7 million barrels per day (b/d) to 3.7 million b/d in 2021 and 4.4 million b/d in 2022 to fill the gap between refinery inputs of crude oil and domestic crude oil production.
The next OPEC+ meeting is due to this week.
Author: Marina Tsutskiridze, Investment Specialist
Sources: CBR, Vedomosti, Bloomberg, TKB Investment Partners (JSC); March 2021
 Russian market sector structure implies underweight position in consumer discretionary sectorRussian Equities Weekly_29 March_2021