Page 53 - UKRRptMar19

8.3 Stock market
8.3.1 Equity market dynamics
Sentiment on emerging markets and Russia turning as EM funds have second biggest inflows ever
After a terrible year in 2018 sentiment towards emerging markets (EMs), and Russia in particular, seems to be turning more positive after EM bonds funds had their second best week on record in terms of inflows and equities also attracted new money, Slava Smolyaninov Executive Director Chief of BCS Global Markets reports.
“EM assets still got a lot of love last week as it proved second best on record for EM bond funds. Inflows into stocks stayed at a steady healthy level with no signs of overheating – unlike those of bonds,” Smolyaninov said in a note to investors.
The stock trading company EPFR Global released its fund flows data through the week ending February 12 that reports Russian assets saw circa $370mn of net inflows from combined equity and bond fund flows in the reported week compared to circa $240mn in the previous one, BCS reports.
While Russian bonds have been an investors favourite in 2017 and for half of 2018 as well, until the US Treasury Department (USTD) slapped sanctions on Russian aluminium producer Rusal and Congress threatened to target bonds with “crushing” sanctions this year. However, after these sanctions failed to appear at the end of last year and Russia just put in record current account and federal budget surpluses of 2018 the interest in Russian bonds is perking up again.
The USTD decided to drop the sanctions on Rusal completely in December 2018, which has improved sentiment further. And confidence just got another boost: Moody’s returned Russia to “investment grade” in February, completing
53 UKRAINE Country Report March 2019 www.intellinews.com