Morning Note /
Russia

Alfa Morning Bulletin: 2 September 2021

  • Investors buy the dips betting on stimulus being extended amid the spread of Delta

  • Cyclical stocks led the Russian market higher, with tech also well bid

  • Russian equities to assume a holding pattern as investor focus switches to US monthly payrolls tomorrow

Alfa
2 September 2021
Published byAlfa

Investors buy the dips betting on stimulus being extended amid the spread of Delta: After Tuesday’s pullback, equity investors were again buying the dip and markets pressed towards fresh record highs. Russian equities advanced at a solid clip on Wednesday – RTSI (+1.8% @ 1,715) and IMOEX (+1.3% @ 3,971) – with cyclical names well bid. The ruble was firm (+0.1% @ 73.01) versus a weaker US dollar and a rebound in crude quotes (Brent -1.9% @ 71.59).

Russian equities to assume a holding pattern as investor focus switches to US monthly payrolls tomorrow: We expect Russian stocks to trade in a holding pattern today as investors concentrate their attention on tomorrow’s August payrolls report from the US. Assessing that is all the more uncertain due to a disappointing reading on ADP private payrolls but a solid ISM survey of manufacturing. A strong reading would provide support to the US market and by default that would filter through to other markets including Russia. At the same time, a weak payrolls number is expected to be positive for risk assets since it would lessen pressure for an early tapering from the Federal Reserve. From a Russian equity perspective, we see a win-win scenario.

KEY NEWS

Rosstat reported inflation at 0.2% MTD as of 30 August, annual inflation reached 6.8% y/y – NEGATIVE

Russia’s unemployment rate fell sharply from 4.8% in June to 4.5% in July – MIXED

Magnit (O/W): Dixy deal price increased – SLIGHTLY NEGATIVE