Morning Note /

Alfa Morning Bulletin: 16 April 2021

  • Russian stocks pare losses and ruble closed shrugging off new sanctions

  • Markets rally on strong US and Chinese macro data

  • Russian equities poised for strong rebound

16 April 2021
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Russian stocks pare losses and ruble closed shrugging off new sanctions: Russian stocks were under pressure yesterday after the US imposed sanctions for the SolarWinds hacking that includes restrictions on US banks buying Russian sovereign debt from the primary market; however, investors shrugged off the measures, which on the whole were less severe than many had expected and Russian equities eventually started paring back the losses – RTSI (-1.0% @ 1,474) and IMOEX (-0.2% @ 3,568). The ruble pared intraday losses to close flat (unch. @ 76.20). Aside from the restrictions on the Russian primary debt market for US investors, the rest of the sanctions were more of the same, i.e. sanctions on state officials and state entities. Elsewhere, oil prices remained firm (Brent +0.4% @ 66.94).

Russian equities poised for strong rebound: We expect the Russian equities markets to bounce back today in a relief rally as investors shrug off the latest US sanctions, which were not as potent as may have been expected. US President Joe Biden delivered on a promise to punish Russia for the SolarWinds hacking and election interference. But, for all the tough talk, Biden’s move showed he’s still holding out hope for better ties with Moscow. Although the White House portrayed the sanctions as severe, they were not as potent as some American lawmakers and advocacy groups had been hoping for and they leave open the door for diplomacy. There is still a hope that the Biden-Putin summit may still go ahead. We expect a broad rally across all sectors, with both growth and value stocks primed for gains. Russian commodity exporters in particular should benefit from the record Chinese GDP data for Q1 (+18.3%) and the higher oil price.

Key news

Rosstat reported 1.1% y/y industrial production growth in March, -1.3%y/y for 1Q21 – Neutral

VTB (E/W): 1Q21 IFRS preview

EVRAZ announced an interim dividend of $291.7 mn and details of the coal asset demerger – Positive

Detsky Mir (E/W): 1Q21 trading update – Neutral-to-Positive

Fix Price (N/R): 1Q21 trading update – Neutral-to-Positive

QIWI announced $0.31/share in 4Q20 dividend – Neutral

Sergi Herrero to step down from VEON co-CEO position – Negative