Alfa Morning Bulletin: 20 May 2021

  • Risk-off engulfed markets
  • Russian equities should forge higher
  • Strong selling, in part due to corporate events

Risk-off engulfed markets: Global markets were in freefall yesterday as inflation worries cast a shadow over sentiment. There was also turmoil in the crypto market after China placed restrictions on financial intuitions participating in crypto-related deals: Bitcoin fell 30% to ~$32,000 before bouncing back to below $40,000, paring all losses. Cyclical stocks and those that benefit from the reflation trade pulled the Russian equity market lower – RTSI (-1.4% @ 1,552) and IMOEX (-1.4% @ 3,634). The ruble strengthened slightly (+0.1% @ 73.71), remaining firm considering the drop in oil prices (Brent -2.9% @ 66.66).

Russian equities should forge higher: We expect the Russian stock market and the ruble for forge higher today buoyed by US President Biden signing a waiver to give Nord Stream-2 the green light for completion. The easing of geopolitical tensions and dialing down of sanctions risk improves the investment case for Russian stocks and can be expected to unlock some value. That said, there are some headwinds emanating from the global markets: the US Federal Reserve has started to talk about tapering if economic growth holds steady and that has pushed 10UST towards 1.7% and lifted the US dollar. Commodity prices have pulled back from recent highs and oil prices face some downside risk if the Iran nuclear deal is resumed by the US. The ECB highlighted in its Financial Stability Review its mounting concerns that the flood of fiscal and monetary stimulus needed to fight the pandemic is also building up dangerous imbalances. If more upward surprises in US inflation prompts investors to bet on earlier monetary tightening, driving up bond yields without an accompanying improvement in economic growth, “spillovers from US equity market repricing could be substantial,” the central bank said Wednesday.


De Beers 4th cycle sales decline 15% - NEUTRAL

PhosAgro 1Q21 IFRS financials review: EBITDA in line, up 86% q/q, quarterly yield 2.3% – POSITIVE

Lenta (O/W): Billa Russia acquisition – NEUTRAL-TO-POSITIVE

Ozon minority holders offered 2.9% ADRs at $50 in ABB — NEUTRAL

Yandex appoints new CFO and COO – NEUTRAL

MTS to spin-off telecom infrastructure and MGTS into a new entity to speed up digital development — NEUTRAL

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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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