Russian equity market dynamics
Last week, the Russian equity market underperformed the broader emerging markets (EM) index by 2.4%.
This was due to both a Russia-specific factor and the different sectoral structures of the two indices.
- Russia-specific factor: Political tensions over military movements on the Russian-Ukrainian border continue to concern investors and put pressure on the Russian equity market
- Sector-specific factor: An additional negative effect came from Russia’s overweight in the energy sector as oil prices declined.
|MSCI Russia 10/40 TR in USD||-3.7%||22.4%|
|MSCI EM index TR in USD||-1.3%||0.1%|
|Due to Russia-specific factors*||-1.2%||12.7%|
|Due to difference in sector structure*||-1.2%||9.6%|
|MSCI EM HDY index TR in USD**||-0.7%||6.7%|
|* See details of methodology at the end of the report
**MSCI Emerging Markets High Dividend Yield Index
*** We use Brent Oil and LBMA Gold, in USD terms. Energy weight in the MSCI Russia 10/40 is 38%; gold producers’ weight in the index is 9% (as at the end of October 2021)
Data as of 19 November 2021
TKB Investment Partners (JSC) calculations; Bloomberg
|Upside/downside to fair price||12%|
|Data as of 19 November 2021
TKB Investment Partners (JSC) calculations
Main Russian news
According to a preliminary report from Rosstat, Russian GDP in the third quarter grew by 4.3% YoY. This is the highest figure for the period since 2011. Russia’s President Vladimir Putin said that the country’s GDP could grow by 4.7% by the end of 2021. Should that happen, the annual rate would be a record high since 2008. The Ministry of Economic Development expects the economy to grow by 4.2% in 2021, while the Central Bank of Russia estimates that growth will be 4%-4.5%.
Rosstat is due to publish industrial production figures for October.
Author: Marina Tsutskiridze, Investment Specialist
Sources: Vedomosti, Bloomberg, TKB Investment Partners (JSC); November 2021