Russian equity market dynamics
Last week, the Russian equity market outperformed the broader emerging market (EM) index by 1.2%. This was due to both a Russia-specific factor, and the difference in the indices’ structure.
- Russia-specific factor: The positive effect came as tensions eased between Russia and the UK about the presence in the Black Sea of a British vessel.
- Sector-specific factor: The Russian equity market gained additional support from the overweight in the index of the energy and materials sectors, both of which outperformed the broader EM market.
|MSCI Russia 10/40 TR in USD||-0.5%||17.7%|
|MSCI EM index TR in USD||-1.7%||6.0%|
|Due to Russia specific factors*||0.8%||5.7%|
|Due to difference in sector structure*||0.4%||6.0%|
|MSCI EM HDY index TR in USD**||-1.5%||9.7%|
|* 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 36%; gold producers’ weight in the index is 8% (as at the end of June 2021)
Data as of 2 July 2021
TKB Investment Partners (JSC) calculations; Bloomberg
|Upside/downside to fair price||6%|
|Data as of 2 July 2021
TKB Investment Partners (JSC) calculations
Main Russian news
Russia’s key macroeconomic indicators improved in May. Industrial production increased in both the manufacturing and extraction segments. It was the first time since February 2020 that the extraction segment had posted growth. Retail sales also strengthened in both the food and non-food segments. According to Rosstat, the main reason for such a significant increase in indicators was the low base 12 months earlier, when lockdowns were introduced to halt the spread of Covid-19. Rosstat published real wage growth data for April, which showed an increase of 7.8% YoY.
|Key macroeconomic indicators, YoY dynamics|
|April 2021||May 2021|
|Real wages||7.8%*||Not available|
* Data updated by Rosstat
Rosstat is due to publish inflation data for June later this week.
Author: Marina Tsutskiridze, Investment Specialist
Sources: Rosstat, Bloomberg, TKB Investment Partners (JSC); July 2021