Russian equity market dynamics
Last week, the Russian equity market outperformed the broader emerging market (EM) index by 2.3%.
The relative outperformance was mainly due to the difference in the two indices’ sector structures. In particular, the Russian equity market benefited from:
- Its overweight in the energy sector, which rose on the back of increasing oil prices
- The absence of the consumer discretionary sector in the Russian index, as EM companies in this sector declined by about 7%
- The absence of the IT sector in the index, as the EM IT sector declined by 6%.
|MSCI Russia 10/40 TR in USD||-0.7%||9.3%|
|MSCI EM index TR in USD||-3.0%||1.8%|
|Due to Russia specific factors*||0.5%||0.6%|
|Due to difference in sector structure*||1.8%||6.9%|
|* 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 14 May 2021
TKB Investment Partners (JSC) calculations; Bloomberg
|Upside/downside to fair price||8%|
|Data as of 14 May 2021
TKB Investment Partners (JSC) calculations
Main Russian news
The number of individual investors on Moscow Exchange has risen to 11.7 million. In April, more than 600 000 people opened individual brokerage accounts. During the same month, individual investors invested a record RUB 77 billion (USD 1 billion) into Russian equities, RUB 82 billion (USD 1.1 billion) in the fixed income market and around RUB 10 billion (USD 0.1 billion) in mutual funds and exchange-traded funds (ETFs). Retail investors are also becoming more active. Last month, some two million of them made transactions on the Moscow Exchange, compared to only 600 000 in April last year.
Author: Aleksandra Kuznetsova, Investment Specialist
Sources: Rosstat, Bloomberg, TKB Investment Partners (JSC); May 2021