Russian equity market dynamics
Last week, the Russian equity market underperformed the broader emerging market (EM) index by 0.8%.
This was due to the difference in sector structures of the two indices, mainly the overweight in energy and materials. These sectors fell by 2.8% and 2.2% in the EM index, respectively. Russia-specific factors partially offset the impact from the sector-specific factors. These mainly concerned greater investor optimism over stronger Russia-EU energy cooperation in the face of the energy crisis in Europe.
Main Russian news
The Central Bank of Russia unexpectedly raised its key rate by 75bp to 7.50%. The market had expected a 25-50bp increase. The bank noted that inflation continued to exceed its forecast substantially and now it is expected to be at 7.4-7.9% at the end of 2021. Based on the CBR’s latest forecast, inflation will edge down to 4.0-4.5% in 2022 and remain at close to 4% later. CBR Governor E. Nabiullina said that the new forecast suggested the average key rate would be at 7.3-8.3% in 2022, and at 5.5-6.5% in 2023.
To watch…
Rosstat is due to publish industrial production figures.
Author: Marina Tsutskiridze, Investment Specialist
Sources: Vedomosti, Bloomberg, TKB Investment Partners (JSC); October 2021