Russian Equities Weekly December 20–24, 2021: Industrial production keeps accelerating

Russian equity market dynamics

Last week, the Russian equity market outperformed the broader emerging markets (EM) index by 0.3%. This was mainly due to Russia-specific factors.  Most likely, the market bounced a bit after previous underperformance due to geopolitical concerns.

  Week YTD
MSCI Russia 10/40 TR in USD 0.7% 12.4%
MSCI EM index TR in USD 0.4% -3.5%
Excess return 0.3% 15.9%
Due to Russia-specific factors* 0.2% 4.1%
Due to difference in sector structure* 0.1% 11.9%
MSCI EM HDY index TR in USD** 0.4% 7.5%
Key commodities***
Oil 4.3% 47.0%
Gold -0.1% -4.4%
RUB/USD 0.1% 0.1%
RUB/EUR 0.0% 8.1%
* 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 November 2021)

Data as of 24 December 2021

TKB Investment Partners (JSC) calculations; Bloomberg

Upside/downside to fair price 28%
Data as of 24 December 2021

TKB Investment Partners (JSC) calculations

Main Russian news

Russia’s industrial production growth accelerated to 7.0% YoY in November. The increase was seen in all four sectors. Extraction industries grew by 10.2% YoY, manufacturing industries rose by 5.3%YoY, the heat and gas supply sector rose by 3.9% YoY, industries related to water supply and sewerage, waste disposal and pollution elimination increased by 10% YoY. If compared to the pre-pandemic period (November 2021 to November 2019) the industrial production grew by 5.9%.

A meeting of the Russia-NATO Council may be scheduled for January. NATO Secretary-General Jens Stoltenberg has proposed holding a meeting of the Russia-NATO Council on January 12th, according to the information from the Russian Foreign Ministry. The meeting is proposed to discuss the draft of security documents demanding an end to NATO’s eastward expansion and military cooperation with countries such as Ukraine and Georgia, among other things. Russia presented this draft two weeks ago (please see some details in our previous weekly comments).


Author: Marina Tsutskiridze, Investment Specialist

Sources: Vedomosti, Bloomberg, TKB Investment Partners (JSC); December 2021

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