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10 I Companies & Markets bne February 2022
no setbacks with Ukraine military action or a renewal of the pandemic with yet another variant virus.
EPFR Global reported inflows from combined equity and bond fund flows in the reporting week ending January 6 versus c$50mn of outflows during the previous one – the best inflows since early November, when the Ukraine border military build- up was first reported.
Russia-dedicated funds saw outflows fall to c$20mn in the week against c$40mn of outflows in the previous week. Dedicated Russian equity funds have seen outflows in six of the last seven weeks, according to EPFR.
Combined Russia and EM funds saw inflows of c$50mn, on a par with the previous week’s c$60mn of inflows, when inflows resumed.
Flows into Russian-dedicated bond funds were flat on the week, while combined EM bond flows were up c$30mn in versus c$15mn outflows in the previous week – the first inflows since early September last year.
“Russia made a solid start to 2022. The Kazakhstan impact is limited so far. As in the previous week, inflows into GEM equity funds made the overall fund flow picture for Russian stocks positive. This fund category reported $1.2bn of new investor cash put to work, [the] second consecutive week of inflows and two best back-to-back weeks since June,” Slava Smolyaninov, head of strategy at BSC GM, said in a note. “Russia-dedicated funds had another negative week, but outflows were [a] relatively minor $22mn.”
Norwegian fertiliser producer Yara initiates wind-down of its sourcing of Belarusian potash
bne IntelliNews
The Norwegian fertiliser producer Yara has succumbed
to criticism that it ignored sanctions on Belarus and has announced it will cease to sourcing potash fertiliser from the Belarusian state-owned company Belaruskali, the company said on its website on January 10.
The company was reacting to criticism it had received for continuing to do business with Belarus after the US and EU
www.bne.eu
Elsewhere, the fund flow picture was mostly positive, with China funds reporting net inflows of $2.3bn, the dominant force. In general, Russian flows do well when China does badly, and vice versa.
“During the slow times of early 2022, global investors appear more positive on EM stocks, which should support the Russian stock market in the coming weeks,” Smolyaninov adds. “The Kazakhstan riots are [a] true regional black
swan and a point to watch for investment community in the near term, with admittedly very low visibility in terms of investment implications. Yet we doubt they would lead to major outflows from EMEA, Eastern Europe or Russia equity funds unless seriously escalating.”
EM Bonds also had their best week since early September. Global EM bonds funds finally reported net inflows of $475mn, the most significant intake since early September, reports EPFR.
Net flows for the Russian bond funds were muted, as the country is on long New Year and Christmas holidays. While EM bond spreads have seriously narrowed in the past couple of weeks, the pressure from the UST yield curve remains, BCS GM reports.
“Both GEM equity and bond funds suggest renewed global investor interest in the asset class at the beginning of the year, which is positive. Russia-dedicated flows are suppressed by the low season, while Kazakhstan developments have limited impact on regional fund flows so far,” Smolyaninov said.
Yara road tanker loading with fertiliser.
imposed harsh sanctions on the country last year after the strongman leader Belarusian President Alexander Lukashenko cracked down on pro-democracy protests that broke out following a disputed presidential election. Sanctions against the state-owned Belarusian potash producer Belaruskali, one of the country’s biggest cash cows, have negatively affected Yara’s supply-chain to such an extent that management has decided to cease doing business with Belarus.