Page 2 - bne_newspaper_March_01_2019

Top Stories
March 1, 2019 www.intellinews.com I Page 2
International investors remain overweight in Russian stocks, but oil sector loses its appeal
the deep associated ruble devaluation, and the oil index was flat y/y in 2015.
However, from 2016 the salutary effects devalu- ation had on costs, which are priced in rubles whereas income is in dollars, saw the oil index soar and return near 50% y/y. 2017 was more dif- ficult for oil stocks as oil prices fell again into the $40s, but as the year came to an end they started to rise strongly, finishing 2017 with an overall gain for the sector of about 10%.
Last year was another good one for oil stocks as price growth continues, with oil rising from an average price of around $65 in the first half of the year to around $75 in the second. However, as the year came to an end oil prices started falling again and in January the average oil price fell to $56.
That has taken the wind out of the sails for portfolio investors looking at oil. However, there is still some upside left as oil prices recovered in February and were $66 for a barrel of Brent at the time of writ- ing. Bankers are assuming prices will return to an average of $65 this year, but much will depend on if the production cuts deal with OPEC will be extend- ed at a meeting in Vienna scheduled for April.
In the meantime BCS reports that while three quarters of its clients were overweight Russian oil stocks in November, now 60% are either flat or underweight. It seems the oil recovery story has run its course. In November half of some inter- national investors’ portfolios were made up of oil and gas stocks.
Investors have switched to more domestic stories and currently the utilities sector is the best per-
Russian Market Data Value
1M YTD
Equity Indices
RTSI
1,191
0%
11%
MOEX
2,491
0%
5%
MSCI EM
1,061
3%
10%
S&P
2,792
5%
12%
NASDAQ
7,555
5%
15%
DAX
11,487
2%
9%
FTSE
7,107
4%
6%
Commodities
Price, $
1M YTD
Brent
1,191
0%
11%
WTI
2,491
0%
5%
Urals
1,061
3%
10%
Gold
2,792
5%
12%
Silver
7,555
5%
15%
Nickel
11,487
2%
9%
Copper
7,107
4%
6%
Aluminum
1,898
2%
2%
Equity Indices
Value
Russia Sectors performance % YTD
1M YTD
USD/RUB
65.78
0%
-5%
EUR/RUB
74.78
-1%
-6%
EUR/USD
1.137
0%
-1%
Russia sectors performance % YTD
Oil & Gas Utilities Financials RTS Consumers Telecoms M&M
8
13
15
11
11 10
9
0 5 10 15 20
Source: MOEX source: MOEX
Sectors: % return YTD