Russian Equities Weekly November 15–19, 2021: Pressured by geopolitical concerns and lower oil prices

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
	Current
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%.