Morning Note /

Alfa Morning Bulletin: 23 November 2021

  • Rout of Russian stocks and the ruble

  • Markets unsteady as investors assess the pace of tapering

  • Russian stocks stabilize and provide buying opportunities at current levels

23 November 2021
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Rout of Russian stocks and the ruble: Russian equities extended their losses Monday in a sharp selloff – RTSI (-5.6% @ 1,628) and IMOEX (- 3.6% @ 3,872) – as the rotation out of cyclical stocks gathered pace, amid a surge in Covid cases across Europe and economic disruptions as a result of new lockdowns, coupled with an aversion to risk, which has negatively impacted EM assets recently. The ruble added to last week’s losses (-1.8% @ 74.80) due to a combination of geopolitical risk and a lower oil price environment (Brent +1.0% @ 79.70). There is an almost total rout of Russian equities with almost all stocks in red. Among blue chips we note MGNT (-3.0%), ALRS (-3.5%), GAZP (-3.7%), RUAL (- 4.7%), SBER (-5.2%), YNDX (-8.2%).

Russian stocks stabilize and provide buying opportunities at current levels: Russian equities are showing signs of stabilizing this morning after three sessions of losses that saw the RTS contract almost 9%. We expect a recovery to materialize and see current levels as a good buying opportunity. Adding to the optimism, there is evidence that last week’s rotation out of cyclical stocks into growth shares has petered due to an expansion of Treasury yields following Jerome Powell’s nomination for a second term as head of the Federal Reserve. Commodity prices are better supported this week oil may have found a floor with OPEC+ ready to reassess output quotas if the US and several allies opt to open strategic fuel reserves. We expect Russian cyclical stocks to lead a recovery today.


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