Russian Equities Weekly 1-5/04/2019

09.04.2019

Optimism on the global market helped Russian equities to perform well. Last week, the Russian market rose almost in line with MSCI EM and MSCI World indices, which gained 2.6% and 2% in USD terms, respectively. However, rising oil price did not add to the Russian market’s performance.

Everything up


Week 

YTD

RTS Total Return (TR) in USD      

2.3%

15%

MOEX index TR in RUB

Composite

1.8%

7.6%

Blue Chip

2.3%

9%

Small and mid-cap

1.1%

4.5%

MOEX sector index TR in RUB

Financial Services

1.8%

10.9%

Power Utilities

1.0%

5.9%

Consumer Goods

0.9%

3.4%

Metals & Mining

0.4%

3.3%

Oil & Gas

0.3%

2.3%

FX

RUB/USD

0.7%

6%

RUB/EUR

0.7%

8.7%

Data as of April 5th, 2019
Sources: TKB Investment Partners (JSC) calculations; Bloomberg



Russian equity market dynamics


Optimism on the global market helped Russian equities to perform well. Last week, the Russian market rose almost in line with MSCI EM and MSCI World indices, which gained 2.6% and 2% in USD terms, respectively. However, rising oil price did not add to the Russian market’s performance.

Once again, the financial sector outperformed other sectors. This was mainly due to Sberbank and VTB. Sberbank received an addition boost from news that it agreed with Emirates NBD Bank on the terms of the Denizbank sale. Sberbank will sell 99.85% in Denizbank for USD 2.8 billion. The deal is likely to close later in Q2 2019.

Exporters overall underperformed local demand orientated sectors. This was mainly due to a stronger rouble.

The oil & gas sector was the worst performer overall. This was to a large extent due to Tatneft and Transneft dropping as the Q4 financial results of both companies fell short of market expectations.



Main Russian news


Inflation reached 5.3% YoY at the end of March, up by 0.1% from the end of February, Rosstat reported. Food and services inflation held steady at - 5.9% YoY and 5.1% YoY, respectively. The rise in non-food prices slightly accelerated to 4.7% YoY at the end of March from 4.6% YoY at the end of February.

The Central Bank of Russia expects inflation to be at 4.7%-5.2% at the end of this year. The sensitivity of this forecast to oil price movements is low due to the federal budget rule. The rule calls for the federal budget to only consider as revenue taxes on oil prices at USD 40 per barrel. All additional oil tax revenues are used to buy currency on the open market, to be set aside for a rainy day in the National Wealth Fund.



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


To watch...


Nothing material is planned

Sources: Vedomosti, Bloomberg, cbr.ru, TKB Investment Partners (JSC); April 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% 18.8%
     Gazprom 9% -12.3% 29.2%  
     Sberbank 12% -4% 4.5% 14.1%
     Novatek 13% 6% 20.5%  
     Tatneft 8% 33.7% 41.2% -18.8%
     Magnit -12% -19% 12.4% 7.8%
     MTS -8% -8% 13.6% -46.1%
     VTB 170% 7% -90.7%  
     Alrosa 64% 13% -10.9% -12.2%
     Severstal -14% 14% 0% -10.7%
     NLMK -4% 14% 12.3%  
     Moscow Exchange -7% -8%
4.2% 10.6%
     Magnitogorsk Iron & Steel -22% 6% 0% -20%
     Phosagro -31% -45% -8% -41.5%
 
* 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 April 5th, 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