Russian Equities Weekly 5-9 April, 2021: Further inflation rise

Russian equity market dynamics

Last week, the Russian equity market underperformed the broader emerging market (EM) index by 2.4%.

The relative underperformance was mainly due to a Russia-specific factor: Uncertainties over developments on the Russia-Ukraine border continued to put pressure on the market. Tensions between the two countries continue to escalate. In support of Ukraine, the US declared it is considering deploying warships to the Black Sea in the next few weeks.

  Week YTD
MSCI Russia 10/40 TR in USD -3.0% -0.5%
MSCI EM index TR in USD -0.6% 3.4%
Excess return -2.4% -3.9%
Due to Russia specific factors* -2.2% -5.0%
Due to difference in sector structure* -0.2% 1.2%
Key commodities**
Oil -2.5% 22.4%
Gold 0.9% -7.8%
RUB/USD -1.4% -4.4%
RUB/EUR -1.8% -1.8%
* 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 35%; gold producers’ weight in the index is 8% (as at the end of March 2021)

Data as of 9 April 2021

TKB Investment Partners (JSC) calculations; Bloomberg

Upside/downside to fair price 8%
Data as of 9 April 2021
TKB Investment Partners (JSC) calculations

Main Russian news

Russian inflation increased to 5.8% YoY in March from 5.7%YoY in February, mainly due to increases the non-food segment and in services. Non-food inflation rose to 5.9% YoY from 5.7% at the end of February, while services inflation rose to 3.2% from 2.9%. Meanwhile, food inflation slowed slightly to 7.6% YoY from 7.7% YoY. The Ministry of Economic Development sees the slowdown in food inflation as a signal that the peak of inflation has passed, and April inflation is expected at 5.5%-5.6%.

The number of retail investors on the Moscow Exchange has reached 11 million. More than 750 000 people joined the Moscow Exchange in March. Individual investors continue to be a supporting force in driving the Russian stock market. Net inflows from individual Russian investors into the Russian equity market have totalled circa USD 5 billion over the last 15 months.


Author: Marina Tsutskiridze, Investment Specialist

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

Russian Equities Weekly_12 April_2021
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