Morning Note /
Russia

Alfa Morning Bulletin: 15 November 2021

  • Geopolitical tensions sent Russian equities tumbling lower

  • SNGS continued to skyrocket Friday, while the selloff in Russian equities intensified

  • Russian stocks are likely to remain under pressure but we may see some rebound

Alfa
15 November 2021
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Geopolitical tensions sent Russian equities tumbling lower: Russian equities came under more intensive selling pressure Friday – RTSI (- 3.8% @ 1,784) and IMOEX (-1.6% @ 4,121) – as geopolitical tensions intensified on two closely-connected fronts. Moscow is getting sucked into the escalating border spat between the EU and Belarus while the US is claiming that Russia is planning an invasion of Ukraine, albeit Washington has provided no details on the latter. The ruble predictably was also under pressure (-1.8% @ 72.90). Crude prices retreated (Brent -0.8% @ 82.17) and conceded about 2.0% for the week hit by a strengthening US dollar and speculation that President Joe Biden's administration might release oil from the US Strategic Petroleum Reserve.

Russian stocks are likely to remain under pressure but we may see some rebound: We expect the Russian stock market to remain under pressure today due to a drop in energy prices and a tense geopolitical backdrop. An international agreement at the COP26 climate summit to phase down coal usage is likely to weigh on coal producers and has dragged down coal shares across Asia on Monday, but tight supply provides a solid floor for many stocks in the sector. Crude prices are extending losses this morning (Brent -0.4% @ 81.83) hit by a strengthening US dollar and speculation that President Joe Biden's administration might release oil from the US Strategic Petroleum Reserve. US and European stock futures are mixed this morning. But geopolitics is likely to dictate the direction of the ruble and Russian stocks today and potentially this week. That said, the decline in Russian stocks can be expected to ease and we may see some rebound.

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