Russian Equities Weekly 04-08/03/2019

12.03.2019

The Russian equity market outperformed its peers last week thanks to the oil price recovery. Global markets had their poorest performance in nearly three months. This was mostly due to the lack of a resolution of the US-China trade dispute and the ECB’s downgrade of its economic growth forecast for the eurozone to 1.1%.

Resilience to global tumble


Week 

YTD

RTS Total Return (TR) in USD      

-0.7%

10.7%

MOEX index TR in RUB

Composite

-0.1%

4.8%

Blue Chip

-0.1%

5.6%

Small and mid-cap

-0.7%

3.4%

MOEX sector index TR in RUB

Financial Services

0.8%

8.4%

Metals & Mining

-0.3%

3.4%

Oil & Gas

-0.3%

0.6%

Consumer Goods

-0.6%

2.5%

Power Utilities

-0.9%

5.2%

FX

RUB/USD

-0.7%

4.3%

RUB/EUR

0.8%

6.3%

Data as of March 8th, 2019
Sources: TKB Investment Partners (JSC) calculations; Bloomberg



Russian equity market dynamics


The Russian equity market outperformed its peers last week thanks to the oil price recovery. Global markets had their poorest performance in nearly three months. This was mostly due to the lack of a resolution of the US-China trade dispute and the ECB’s downgrade of its economic growth forecast for the eurozone to 1.1%. As a result, the MSCI World and MSCI EM indices dropped by 2.1% and 2.0%, respectively, in US dollar terms.

Financials outperformed the other sectors for the second week running, mostly thanks to Credit Bank of Moscow. Its shares rose by 6.4% after Forbes included it as the top Russian lender in its list of the world's best banks.

Power utilities lagged. Inter Rao, Rosseti, and RusHydro fell by the most: by 2.3%, 1.4%, and 1.2%, respectively.



Main Russian news


Inflation reached 5.2% YoY in February, up by 0.4% from January, Rosstat reported. Food inflation saw the largest rise, accelerating to 5.9% YoY, adding 0.8% from the previous month. Non-food and services inflation was 4.6% and 5.1% YoY, respectively. The Ministry of Economic Development expects inflation to peak at 5.5%–5.7% this spring and sees the overall inflation rate at 4.3% by the end of 2019. The Central Bank of Russia (CBR) forecasts annual inflation of more than 5.5% this year, returning to 4% in the first half of 2020.

The CBR said foreign capital inflows grew in February. The reaction of non-residents on talk of possible sanctions was negligible and short-term, the regulator noted. The Russian securities market remained stable, with no significant volatility. Government bond (OFZ) purchases increased and returned to the level of Q1 2018. The share of foreign investment in OFZ rose by 1.1% to 25.5% last month. In eurobonds, it rose to 52.5%, adding 0.5% from January.



Author: Marina Tsutskiridze, junior investment specialist


To watch...


Polymetal, Rostelecom, RusAgro and RusHydro are due to publish full-year 2018 IFRS results


Sources: Vedomosti, cbr.ru, Bloomberg, TKB Investment Partners (JSC); March 2019



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


Major RTS index constituents     Q1 2018     Q2 2018     Q3 2018     Q4 2018
     Lukoil 9% 1%  22.3%  
     Gazprom 9% -12.3% 29.2%  
     Sberbank 12% -4% 4.5% 14.1%
     Novatek 13% 6% 20.5%  
     Tatneft 8% 33.7% 41.2%  
     Magnit -12% -19% 12.4%  
     MTS -8% -8% 13.6%  
     VTB 170% 7% -90.7%  
     Alrosa 64% 13% -10.9%  
     Severstal -14% 14% 0% -10.7%
     NLMK -4% 14% 12.3%  
     Moscow Exchange -7% -8%
4.2%  
     Magnitogorsk Iron & Steel -22% 6% 0% -20%
     Phosagro -31% -45% -8%  
 
* 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 March 8th, 2019

The above-mentioned companies are for illustrative purpose only, are not intended as solicitation of the purchase of such securities, and does not constitute any investment advice or recommendation