Morning Note /

Alfa Morning Bulletin: 14 January 2021

  • Ruble slumps, Russian stock rally loses steam

  • Cyclical stocks expect to lift Russian market higher

  • Global markets inch higher

14 January 2021
Published byAlfa

Ruble slumps, Russian stock rally loses steam: The ruble weakened Wednesday (-0.3% @ 73.76) after the Russian Finance Ministry announced it will restart regular foreign currency purchases for the first time in a year. That weakness has come against a resurgent US dollar (DXY +0.3% @ 90.36). That in turn has capped a lid on recent oil prices gains (Brent -0.5% @ 56.30). Against that backdrop, Russian equities pared opening gains to trade sideways – RTSI (+0.1% @ 1,487) and IMOEX (-0.05% @ 3,470). Cyclicals remained the main driver of growth although the gains were limited to oil & gas names and coal & gold names. OZON (+3.9%) was again well bid.

Cyclical stocks expect to lift Russian market higher: The Russian market has opened lower but we expect it to gain traction and push higher driven by the pro-cyclical stocks. We expect coal miners to lead a climb in the metals & mining sector and steel stocks are due a bounce back. That said, investors remain cautious over the political transition in the US and the Covid pandemic, with record high deaths and infection rates across America, Europe and Asia. President-elect Joe Biden is expected on Thursday to unveil his long-awaited stimulus plan, reportedly around $2.0 tn. He is expected to split his fiscal stimulus package into two tranches: the first will likely focus on direct support to the population, businesses, the economy and vaccination program; and the second will be allocated to infrastructure spending and be funded by some tax hikes. Biden is reportedly looking for bi-partisan support for these bills, hence they are likely to be supportive of market sentiment.

Key news

Finance Ministry to purchase $1.4 bn in January to its oil fund – Mixed

Inflation is reported at 0.4% MTD as of 11 January – Neutral

Russian steel majors sign long-term supply contracts with local developers – Positive

ALROSA December sales hit record highs, optimistic 1Q21 outlook – Positive