Page 10 - RusRPTMay21

2.0 Politics
2.1 Putin’s state of the nation speech
During annual address, President Putin announces less spending than expected, takes conciliatory tone on international affairs and puts pressure on major shareholder dividends.
President Vladimir Putin made his annual address to the Federal Assembly on April 21. Contrary to expectations, Putin did not introduce a massive spending stimulus but proposed some targeted social measures to reduce inequality, as well as an infrastructure stimulus and additional funding for healthcare and education.
While announcing additional spending on infrastructure, Putin noted that business owners should invest dividends at home rather than accumulating them abroad. The measures appear to require limited spending, e.g. RUB400bn in 2021-22, according to the Ministry of Finance, and they are unlikely to push inflation upwards or give CBR reasons to hike rates further.
Putin’s address appeared to be more of a declaration than a roadmap, in our view, and the details as they come out could change the picture drastically.
As for stock implications, we think Detsky Mir could be the main beneficiary, followed by Magnit and X5. While there could be changes in how dividends are taxed, any changes will likely focus on incentives for companies’ largest shareholders (primarily in the metals and mining space) rather than minority investors.
Social outlays. The goal of the additional outlays is to reduce poverty and support families that earn per member less than minimum wage (equal to the subsistence level). In addition to the introduction of previous social obligations, single-parent families will receive RUB5,600/month per child younger than 16. Sick leaves for children should be compensated in full, regardless of the mother’s employment, and pregnant women should receive monthly benefits of RUB6,350/month. Moreover, families with children in school should receive a lump sum of RUB10,000 in mid-August before the start of the next school year. Overall, the state aims to introduce a social treasury in 2022 so that families can receive their benefits remotely.
Healthcare. While President Vladimir Putin praised the efforts of Russia’s medical workers in fighting COVID-19, he also said that the country should be ready to have testing systems against new viruses and diseases in place within four days of an outbreak, as well as be ready to discover and develop vaccines swiftly. Putin noted the need to gain herd immunity by autumn and promoted vaccinations. He also suggested expanding the supplies available for mobile checkup units to the regions to mitigate the consequences of post-COVID-19 syndromes starting from 1 July. This is crucial to reaching the national target of a life expectancy of 78 by 2030 (Russia’s current life
10 RUSSIA Country Report May 2021 www.intellinews.com