Morning Note /
Russia

Alfa Morning Bulletin: 12 April 2021

  • Russian stocks retreated on Friday

  • Markets retreat as conviction remains weak

  • Russian equities likely to remain subdued

Alfa
12 April 2021
Published by

Russian stocks retreated on Friday: Markets struggled for direction on Friday as investors weighed economic recovery with inflationary concerns and Covid worries. Russian equities underperformed – RTSI (-1.6% @ 1,417) and IMOEX -0.6% @ 3,486) – with blue-chip cyclicals under selling pressure. The ruble was back under pressure (-0.4% @ 77.72). Oil price dynamics remained subdued (Brent -0.4% @ 62.95).

Russian equities likely to remain subdued: Russian equities can be expected to remain subdued today as Covid risk continues to outweigh economic recovery. The Federal Reserve Chair Jerome Powell reiterated this point on Sunday, saying that “the US economy is at an inflection point with stronger growth and hiring ahead thanks to rising vaccinations and powerful policy support, but Covid-19 remains a threat”. Geopolitical risk continues to hang over Russia like a Sword of Damocles, but sanction are widely believed to be off the radar on a near-term horizon, at least until after the Climate Summit on 22-23 April. We expect a mixed session stock and sector wise, in line with recent trends. The reflation trade remains in play but growth and tech stocks may also benefit from a slightly weaker and narrower Treasury yields. Oil prices are ticking lower and US futures are pointing to a weaker open.

KEY NEWS

Russia’s current account surplus reached $16.8 bn in 1Q21, below expectations due to strong import growth – NEGATIVE

Nornickel’s lower final dividend announcement offset by proposed $2bn buyback program possibility – NEUTRAL-TO-POSITIVE

ALROSA March sales: minor decline after major restocking, but at normalized levels – NEUTRAL-TO-POSITIVE