Russian equity market dynamics
Last week, the Russian equity market outperformed other emerging markets (EM). The RTS gained 0.7% while the MSCI EM index lost 0.5% (all figures in USD terms). The Russian market was supported by the spike in the price of Brent crude oil and the strengthening rouble after Saudi Arabia halved its oil output as a result of a terrorist attack. Part of the lost output has been recovered already, however prices are being kept at elevated levels by the tensions in the Middle East and uncertainty as to when full-scale production will be restored.
The oil & gas sector outperformed the market. This was mainly due to Novatek and Rosneft’s shares, which rose by 5.4% and 4.5%, respectively, both in rouble terms. Oil prices rose by 6.6% last week as a consequence of an oil production cut in Saudi Arabia. Novatek and Rosneft’s shares rose in line with the higher oil prices.
The consumer goods sector was the worst performer of the week, dragged down mainly by X5 retail group and Yandex. There was no fundamental news to justify the poor performance of these stocks.
Main Russian news
Key macroeconomic indicators were mixed in August. The rise in industrial production was mainly due to an improvement in natural resources extraction, which was enough to compensate for the fall in manufacturing. Retail sales slowed in both the food and non-food sectors. Rosstat revised real wage growth for July from 3.5% to 3.0% YoY, which was in line with the August results.
To watch…
These is no significant news to follow this week.
Author: Aleksandra Kuznetsova, Junior Investment Specialist
Sources: Vedomosti, Rosstat, Bloomberg, TKB Investment Partners (JSC); August 2019