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Alfa Morning Bulletin: 19 May 2021

  • Investors turn bullish on Russia
  • Hectic day for Russian stocks
  • Russia faces divergent trends: geopolitical progress battles global inflation fears

Investors turn bullish on Russia: Russian equities advanced in a broad rally Tuesday – RTSI (+1.5% @ 1,574) and IMOEX (+1.3% @ 3,687) – and outperformed global peers. Cyclical stocks and those set to gain from economic recovery led the charge. With sanctions and geopolitical risks easing, investors are turning bullish on Russian stocks, which are benefiting from the reflation trade. The ruble remained firm (-0.1% @ 73.74), but the oil price slipped lower on reports of progress in the Iran nuclear deal (Brent - 1.1% @ 68.71). Prior to that, Brent broke above $70 per barrel intraday, reaching the highest level in two years.

Russia faces divergent trends: geopolitical progress battles global inflation fears: The Russian market is facing diverging trends today. There was further progress on the geopolitical front for Russia last night after reports that the Biden Administration will waive sanctions on the corporate entity overseeing the construction of Russia’s Nord Stream-2 pipeline. Separately Secretary of State Antony Blinken will meet with Russian Foreign Minister Sergei Lavrov tonight after the Arctic Council event in Iceland, the US says. Despite the improvement in the Russian investment case, there are headwinds coming from the global markets. Inflation fears are intensifying and the market is increasingly betting against the US Fed rhetoric that inflation is transitory and there is no need for tapering or rate hikes. On that point, the minutes from the Fed's April meeting, to be published late on Wednesday, and expect the rhetoric to be repeated. Oil prices remain under pressure this morning on reports of a major breakthrough on the Iran Nuclear deal, which could potentially see Iran return to the oil market. The BBC says a big announcement is due today. US and European Futures are trading lower, oil prices are under pressure and Asian markets are down: that said the Russian market may eke out gains supported by progress on the geopolitical front.

KEY NEWS

VTB (E/W): Trust Bank to sell a 9.1% stake via ABB – NEGATIVE

Bank St Petersburg (O/W): 1Q21 IFRS results – NEUTRAL-to-POSITIVE

ALROSA 1Q21 IFRS review: EBITDA slightly below estimates, positive surprise on FCF – POSITIVE

Magnit (O/W): Dixy business acquisition – POSITIVE

MTS reports healthy 1Q21 results, guidance reiterated – NEUTRAL

Ozon reports strong 1Q21 results, raises 2021 GMV growth guidance – Neutral-to-Positive


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The contents of this document have been prepared by Joint Stock Company “Alfa-Bank” ("Alfa Bank") as Investment Research within the meaning of Article 36 of Commission Delegated Regulation (EU) 2017/5...

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