Page 32 - Eastern Europe Outlook 2020

However, this rerating process is coming to an end: it started with the apolitical retail sector but with Gazprom’s outperformance it has now happened in the heaviest and most political of the publicly owned stocks.
There is still plenty of value left in the market as prices remain very depressed but the action in 2020 is likely to shift to the secondary and tertiary names that have been ignored until now, which is traditionally how Russia’s regular rallies progress.
Russia’s equity market remains very cheap compared to EM peers, trading at a 54% discount to the EM average and at p/e of only 5%.
Which sectors will perform is difficult to predict. ​In 2017 it was the consumer names that did best, but that story ran its course and consumer names were the worst performing in 2019, returning only 14%. Metals and mining, especially steel, were the star performers of 2017, but in 2019 with falling demand in China the prices of iron fell 15% over the year and dragged all the names down, which is expected to continue in 2020.
32​ EASTERN EUROPE Outlook 2020​ ​ ​www.intellinews.com