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.
| Week | YTD | |
| MSCI Russia 10/40 TR in USD | -3.7% | 22.4% |
| MSCI EM index TR in USD | -1.3% | 0.1% |
| Excess return | -2.4% | 22.2% |
| 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% |
| Key commodities*** | ||
| Oil | -4.0% | 54.9% |
| Gold | 0.0% | -1.4% |
| FX | ||
| RUB/USD | -0.9% | 0.7% |
| RUB/EUR | 0.8% | 9.0% |
| * See details of methodology at the end of the report
**MSCI Emerging Markets High Dividend Yield Index *** We use Brent Oil and LBMA Gold, 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 |
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| Current | ||
| Upside/downside to fair price | 12% | |
| Data as of 19 November 2021
TKB Investment Partners (JSC) calculations |
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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%.
To watch…
Rosstat is due to publish industrial production figures for October.
Author: Marina Tsutskiridze, Investment Specialist
Sources: Vedomosti, Bloomberg, TKB Investment Partners (JSC); November 2021
