Morning Note /
Russia

Alfa Morning Bulletin: 4 April 2022

  • Russian equities remain buoyant

  • Markets eke out gains despite the negative backdrop

  • Russian stocks and ruble advance despite fresh sanctions noise

Alfa
4 April 2022
Published byAlfa

Russian equities remain buoyant: Russian stocks rallied further on Friday – RTSI (+1.2% @ 1,053) and IMOEX (+2.1% @ 2,759) – clawing back losses from late February. The gains were led by banks – VTBR (+13%), MOEX (+12%), SBER (+7.5%) – which had been the underperformers since the Russian equity market reopened. By contrast, the underperformers on Friday were the recent top performers that consisted of commodity exports – PHOR (-8.0%) NVTK (-4.1%) PLZL (- 1.8%), ALRS (-1.8%). The ruble weakened ahead of the weekend from an opening price of c.83.00 to close at c.86.00 vs. the US dollar. Oil prices retreated further on Friday, closing the session at $103.40/bbl (Brent), recording a 13% drop last week.

Russian stocks and ruble advance despite fresh sanctions noise: The Russian stock market has opened in positive territory this morning, continuing its ascent with financial stocks continuing to lead the advance followed by commodity exporters and retailers. The ruble has strengthened this morning, recouping some of Friday’s weakness. Talks between Russia and Ukraine continue this week. Russian presidential spokesperson Dmitry Peskov said on Sunday that he hopes the negotiations with Ukraine will result in "the signing of a certain document" that will mark "an important step towards normalizing the situation." The EU is expected to announce a new sanctions package on Wednesday. There are reports that the EU may discuss an embargo on imports of Russian gas, a step that would likely send energy prices yet higher while forcing energy rationing in Europe. At the same time, data last week showed inflation in the EU had surged to a record high, piling pressure on the European Central Bank to start tightening monetary policy even as growth slows sharply. Despite the threat of further sanctions facing Russia this week, we expect the ruble to remain firm near current price levels due to the capital controls. For the same reason, we don’t expect any negative movements in Russian equities this week, although further gains are likely to be capped after the recent rally.

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