Russian Equities Weekly August 9–13, 2021: Russia’s budget surplus is growing

Russian equity market dynamics

Last week, the Russian equity market outperformed the broader emerging market (EM) index by 2.2%. This was mainly due to the difference in the two indices’ sector structures. The overweight in the energy sector boosted the Russian market, as the sector rose by more than 2%. Additional support came from an absence of IT companies, as the EM IT sector declined by 4.6%.

  Week YTD
MSCI Russia 10/40 TR in USD 1.4% 18.2%
MSCI EM index TR in USD -0.9% 0.5%
Excess return 2.2% 17.7%
Due to Russia specific factors* 0.4% 8.9%
Due to difference in sector structure* 1.8% 8.8%
MSCI EM HDY index TR in USD** -0.1% 7.7%
Key commodities***
Oil -0.2% 37.1%
Gold 0.6% -6.0%
RUB/USD -0.1% 1.0%
RUB/EUR 0.0% 4.5%
* 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 35%; gold producers’ weight in the index is 8% (as at the end of July 2021)

Data as of 13 August 2021

TKB Investment Partners (JSC) calculations; Bloomberg

Upside/downside to fair price 11%
Data as of 13 August 2021

TKB Investment Partners (JSC) calculations

Main Russian news

Russian budget revenues rose by 82.3% YoY in July. Over the last seven months revenues have reached a cumulative total of RUB 13.7 trillion (USD 185 billion). Oil and gas revenues totalled RUB 4.8 trillion (USD 65 billion), while non-oil and gas revenues were RUB 8.9 trillion (USD 120 billion). Overall budget spending increased by 20.7% YoY and totalled RUB 12.8 trillion (USD 174 billion). As a result, the budget surplus stood at RUB 890 billion (USD 12.1 billion) at the end of July. The Minister of Finance, Anton Siluanov, had previously said that the budget surplus is growing, and that the government may reduce the volume of its borrowing this year.

To watch…

There is no significant news to follow this week.


Author: Marina Tsutskiridze, Investment Specialist

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

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