Russian Equities Weekly 8-12/04/2019

23.04.2019

The Russian equity market ended in the black for the second consecutive week, outperforming its peers. The MSCI World index rose by 0.5% and the MSCI EM index gained 0.4%, in US dollars terms. A sharp hike in oil price was the main driver in the Russian equity market. Brent Crude rose above $71 per barrel, hitting five-month high. OPEC supply cuts, sanctions on Venezuela and Iran and conflicts in Libya continue to favour oil prices - despite fears of slowing global economic growth.

A step ahead of the others


Week 

YTD

RTS Total Return (TR) in USD      

2.3%

17.6%

MOEX index TR in RUB

Composite

0.7%

8.3%

Blue Chip

0.9%

10%

Small and mid-cap

0.1%

4.6%

MOEX sector index TR in RUB

Power Utilities

1.8%

7.8%

Financial Services

0.6%

11.6%

Oil & Gas

0.6%

3%

Consumer Goods

-0.2%

3.1%

Metals & Mining

-0.8%

2.5%

FX

RUB/USD

1.6%

7.6%

RUB/EUR

0.7%

9.5%

Data as of April 12th, 2019
Sources: TKB Investment Partners (JSC) calculations; Bloomberg



Russian equity market dynamics


The Russian equity market ended in the black for the second consecutive week, outperforming its peers. The MSCI World index rose by 0.5% and the MSCI EM index gained 0.4%, in US dollars terms. A sharp hike in oil price was the main driver in the Russian equity market. Brent Crude rose above $71 per barrel, hitting five-month high. OPEC supply cuts, sanctions on Venezuela and Iran and conflicts in Libya continue to favour oil prices - despite fears of slowing global economic growth.

The Power & Utilities sector outperformed other sectors last week. This was mainly due to an increase in Inter RAO share prices. News that the company got 60% of total capacity quota in cogeneration projects for the period 2022-2024 had a positive effect on its shares performance.

Metal & Mining firms lagged behind the rest of the market due to a drop in the price of gold at the end of the week.



Main Russian news


The Ministry of Finance (MoF) set a new record for OFZ treasury bonds last week, beating the previous month’s performance. Over the course of one day, 10th April, MoF managed to sell 137 billion roubles (around 2.13 billion US Dollars) worth of OFZ bonds, while demand was even higher at over 192 billion roubles. This alone accounted for almost 25% of MoF OFZ sales plan for the second quarter of 2019. Foreign investors become more active in OFZs amid talks of a “sanctions fatigue” in the US Congress, and its concerns that restrictive measures against Russia may equally harm the US economy. Non-resident inflow in OFZs triggered strong rouble appreciation.



Author: Marina Tsutskiridze, Junior Investment Specialist



To watch...


Rosstat is due to publish macroeconomic indicators for Q1 of 2019

Sources: Vedomosti, Bloomberg, Rosstat, 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 12th, 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