Morning Note /
Russia

Alfa Morning Bulletin: 8 December 2021

  • Russian equities advanced but lagged the global rally

  • Putin-Biden videocall was constructive

  • Russian stocks can expect a relief rally

Alfa
8 December 2021
Published byAlfa

Russian equities advanced but lagged the global rally: Global markets rallied yesterday as concerns about Omicron receded and cheered by China’s move to support growth by loosening monetary policy. Tech stocks were back in demand. Russian equities lagged behind somewhat as geopolitical risk remained a drag ahead of the Putin- Biden call, but Russian stocks closed with strength – RTSI (+1.6% @ 1,647) and IMOEX (+1.7% @ 3,873). The ruble found momentum (+0.4% @ 74.04) in late trade likely cheered by the videocall between the leaders of Russia and the US. Oil prices remain buoyant (Brent -0.2% @ 75.44) supported by Covid optimism.

Putin-Biden videocall was constructive: The video call between Presidents Putin and Biden was cordial and constructive and may be viewed as a partial success. As expected no breakthroughs were reported but both sides agreed to continue communications and said their respective teams would collaborate on the issues discussed, a development that could lower global tensions. The two leaders hope to hold an in-person summit to discuss ties between the two nations. It is noteworthy that Congress compromised and excluded Russia-related sanctions from the national defense bill (NDAA) that had included Nord Stream-2, restrictions on Russian sovereign debt and sanctions against 35 Russian individuals. All said, there should be relief on the geopolitical side of the Russian investment case this morning.

Russian stocks can expect a relief rally: We expect Russian equities to open higher this morning supported by the easing of geopolitical risk following last night’s videocall between Presidents Putin and Biden as well as the general optimism surrounding vaccines and the early signs that Omicron has milder symptoms than the Delta variant. Higher oil prices overnight provide additional support to Russian stocks and a broad sector-wide advance can be expected with drivers for both value and growth stocks.

KEY NEWS

  • Sberbank (O/W): November 2021 RAS results – NEUTRAL

  • MMK’s Capital Markets Day 2021: 2025 EBITDA target raised $1bn, higher capex plans – NEUTRAL-TO- POSITIVE

  • VEON announces new medium-term targets, confirms dividend commitment as a part of its Investor Day – POSITIVE