Russian equity market dynamics
Last week, the Russian equity market outperformed the broader emerging markets by 1.2%.
This was mainly due to the difference in the two indices’ sector structures. The Russian market was supported by its overweight in the energy sector, which rose by 2.2% in the EM index.
Main Russian news
The Fitch ratings agency raised its GDP forecast for Russia for 2021 to 4.3% compared to 3.7% in its June assessment. The agency’s forecast for 2022 remains at 2.7%, and for 2023 at 2%. Fitch expects inflation to stand at around 6% by the end of 2021, at 4.2% in 2022, and at 4% in 2023. The agency’s view is that Russia’s investment grade BBB sovereign rating is supported by a strong external balance of payments, low government debt and robust macroeconomic policies that have helped maintain stability amid the Covid-19 shock and high oil price volatility.
Russia’s Ministry of Economic Development also raised its estimate of economic growth in 2021. It now expects GDP growth of 4.2% in 2021, compared to its previous forecast of 3.8%. Moreover, it raised its inflation forecast for 2021 to 5.8% from the 5% it forecast in its July report. At the same time, the Ministry lowered its forecast for GDP growth in 2022 3.2% to 3%.
To watch…
Rosstat is due to publish macroeconomic figures for August.
Author: Marina Tsutskiridze, Investment Specialist
Sources: Vedomosti, Bloomberg, TKB Investment Partners (JSC); September 2021