Russian equity market dynamics
Last week, the Russian equity market underperformed the broader emerging markets (EM) index by 4.2%. This was mainly due to Russia-specific factors.
Sanctions fears pressured the market as global headlines continued to speculate on the potential escalation of tensions between Russia and Ukraine. On 21 January, Russia’s Foreign Minister, Sergei Lavrov, met with US Secretary of State, Antony Blinken, to discuss security guarantees in Europe. The US is expected to give a written reply on Russia’s demands later this week.
We see the current drawdown as a good entry point for the Russian market. For more information, please see our latest flash note January 2022 Sanction fears – good entry point for the Russian market.
Main Russian news
Russia’s budget surplus in 2021 amounted to approximately USD 7 billion (RUB 514 billion). Budget revenues exceeded planned levels by 35% or USD 320 billion (RUB 25 trillion). Budget spending exceeded the plan by 15% (almost USD 320 billion). The National Welfare Fund (NWF) rose by USD 0.25 billion (RUB 20 billion) to during 2021. Currently, the fund total some USD 183 billion, which equates to 12% of Russia’s GDP. The liquid part of the fund stands at USD 114 billion or 7% of GDP.
Author: Aleksandra Kuznetsova, Investment Specialist
Sources: Vedomosti, Bloomberg, TKB Investment Partners (JSC); January 2022