Russian equity market dynamics
Last week, the Russian equity market underperformed the broader emerging market (EM) index by 0.2%.
This was mainly due to a Russia-specific factor, namely the incident in which Russian forces fired warning shots towards a British vessel that Russia believed to have entered Russian waters. The UK denies any violation, claiming that the waters where the incident occurred belong to Ukraine.
|MSCI Russia 10/40 TR in USD||1.2%||18.1%|
|MSCI EM index TR in USD||1.4%||7.7%|
|Due to Russia specific factors*||-0.2%||4.8%|
|Due to difference in sector structure*||0.0%||5.6%|
|MSCI EM HDY index TR in USD**||0.9%||11.0%|
|* See details of methodology at the end of the report
** MSCI Emerging Markets High Dividend Yield Index
*** We use Brent Oil and LBMA Gold price data, in USD terms. Energy weight in the MSCI Russia 10/40 is 37%; gold producers’ weight in the index is 9% (as at the end of May 2021)
Data as of 25 June 2021
TKB Investment Partners (JSC) calculations; Bloomberg
|Upside/downside to fair price||3%|
|Data as of 25 June 2021
TKB Investment Partners (JSC) calculations
Main Russian news
Russia’s industrial production accelerated to 11.8% YoY in May after 7.6% YoY in April. This was mainly due to an increase in the extraction segment to 12.3% YoY from a fall of 1.8% YoY a month earlier. It was the first time since February 2020 that the segment had posted growth. The manufacturing segment accelerated on an annualised basis by 11.4%, which was slower than in April, when it grew by 14.9% YoY.
Russia approved new export duties for the metals and mining sector. The new regulations cover a range of goods including steel, ferroalloys, copper, nickel and aluminium. The new duties will consist of the base rate of 15% plus an additional component calculated in US dollars per tonne. The value of this component will depend on the kind of metal or the conversion degree of products in the case of ferrous metals, which would be subject to global price dynamics. The income gained from these duties will be used to compensate for rising metal prices in the local market. The new regulations will enter into force from 1 August and remain so until 31 December 2021. They will only apply to exports to beyond the Eurasian Economic Union.
Rosstat is due to publish some key macroeconomic data for May later this week.
Author: Aleksandra Kuznetsova, Investment Specialist
Sources: Rosstat, Bloomberg, TKB Investment Partners (JSC); June 2021