Morning Note /
Russia

Alfa Morning Bulletin: 18 November 2021

  • Russian equities found momentum despite the sluggish markets

  • Global equities lose momentum on inflation and tapering worries

  • Russian equities are caught between bulls and bears with the latter in control for now

Alfa
18 November 2021
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Russian equities found momentum despite the sluggish markets: Global equity markets are getting stuck in a quagmire due to a lack of catalysts and as investors weigh the inflationary risk with tapering and whether the next Federal Reserve Chief will be more hawkish or dovish than at present. The Russian market was slightly more bullish than the global trend yesterday due to a combination of recent weakness and a bounce in the ruble that supported the dollar-denominated RTS Index – RTSI (+2.0% @ 1,803) and IMOEX (+0.7% @ 4,149). Cyclical stocks were outperformers. Geopolitical risk continued to rumble in the background but is becoming more of a bark with no bite. The ruble advanced at a solid pace (+0.7% @ 72.62). Oil prices dropped significantly in the late evening (Brent -2.8% @ 80.15) as traders bet on the US releasing strategic crude reserves and on concerns over demand as Covid cases surge across Europe.

Russian equities are caught between bulls and bears with the latter in control for now: Russian equities are likely to face an uphill struggle this morning as inflation and the prospect of monetary tightening sent Wall Street lower last night and Asian markets into decline this morning. Adding to that, oil prices are in retreat as the Biden Administration seeks to coordinate with other countries to release strategic oil reserves and rein in energy prices. That said, geopolitical tensions have been dialed down overnight after Belarus moved toward de-escalating a crisis on the EU’s eastern border, by providing shelter for some of the migrants stuck on its border with Poland while pushing for a diplomatic solution with the bloc’s heavyweight Germany. The ease in geopolitical tensions may provide some relief to Russian investment sentiment today but the drop in oil prices can be expected to cap growth. There is also a busy corporate schedule that may focus interest in select names.

KEY NEWS

Inflation returns to 0.2% w/w, reaching 0.3% MTD as of 15 November – NEGATIVE

GDP growth reported at 4.3% y/y in 3Q21 – POSITIVE

MTS reports in-line 3Q21 results, upgrades OIBDA guidance – NEUTRAL

AFK Sistema to a acquire large fishing company in Kamchatka – NEUTRAL