Russian Equities Weekly 29/10-02/11/2018

13.11.2018

Russian equities rose last week despite the drop in the price of oil. The surge of optimism on global markets helped Russia to end the week in the black. This optimism was mainly due to improved investor sentiment surrounding the hope that Sino-US trade tensions could soon ease.

Benefiting from global optimism


Week 

YTD

RTS Total Return (TR) in USD      

3.3%

3.6%

MOEX index TR in RUB

Composite

3.7%

18.8%

Blue Chip

3.8%

22.8%

Small and mid-cap

2.3%

-13.2%

MOEX sector index TR in RUB

Consumer Goods

4.2%

-11.1%

Financial Services

3.3%

-12.0%

Metals & Mining

3.1%

13.9%

Oil & Gas

2.3%

43.6%

Power Utilities

2.0%

-4.0%

FX

RUB/USD

-0.2%

-12.7%

RUB/EUR

-0.7%

-7.6%


Data as of November 2, 2018
Sources: TKB Investment Partners (JSC) calculations; Bloomberg



Russian equity market dynamics


Russian equities rose last week despite the drop in the price of oil. The surge of optimism on global markets helped Russia to end the week in the black. This optimism was mainly due to improved investor sentiment surrounding the hope that Sino-US trade tensions could soon ease.

The consumer goods sector outperformed the market. This was mainly due to Yandex’s stock value rebounding, and gains for the stocks of retail chain companies, X5 and Magnit. The news that Yandex could change its governance structure appears to have reduced investor fears that the management could lose control over the company.

The power utilities sector lagged the other market sectors. Some utilities stocks contracted despite the overall positive trend in the market. There were no news to justify the weaker performance. 


 

Main Russian news


Russia advanced to 31st place in the World Bank’s ‘Doing Business’ rating. Last year it was in 35th place and seven years ago in 120th position. The largest improvement was in dealing with construction permits, for which Russia leapt from 115th to 48th. This was mainly due to two factors: the time period for passing through all the formal procedures related to construction shrank to 192- 194 days from 230-260 days and the building quality control index rose to 14 from 10 (15 is the maximum value of this index). The Minister of Economic Development, Maxim Oreshkin, said that some of the 2017-2018 reforms were not taken into consideration as they were not fully completed by 1 May. With these reforms completed, Russia could rise to 18th place, according to his estimates.



Author: Egor Kiselev, Head of International Business & Investment Marketing


To watch...


VEON and Alrosa are due to publish their Q3 financial results. Rosstat is going to publish inflation figure for October.


Sources: Vedomosti, Interfax, TKB Investment Partners (JSC); as of November 2018



Quarterly results: Actual vs. consensus for EPS, adjusted (US dollars)*


Major RTS index constituents     Q1 2018     Q2 2018     Q3 2018
     Lukoil 9% 1%   
     Gazprom 9% -12.3%  
     Sberbank 12% -4% 4.5%
     Novatek 13% 6% 20.5%
     Tatneft 8% 33.7%  
     Magnit -12% -19%  
     MTS -8% -8%  
     VTB 170% 7%  
     Alrosa 64% 13%  
     Severstal -14% 14% 0%
     NLMK -4% 14% 19.8%
     Moscow Exchange -7% -8%
 
     Inter RAO 53% 52%  
     Magnitogorsk Iron & Steel -22% 6% 0%
     Phosagro -31% -45%  
 
* based on Bloomberg consensus

TBA – to be announced

  Actual figure is better than consensus by more than 5%
  Actual figure is worse than consensus by more than 5%
  The deviation of actual results from consensus is between -5% and 5%

Source: Bloomberg, TKB Investment Partners, data as of November 2, 2018