Page 76 - RusRPTDec19

"We rightfully saw a gap between the oil (47% expect outperformance; 3% see a laggard) and the gas names in the O&G space, as Gas is seen as a likely underperformer in 20% of responses, while only 7% expect it to be a top sector," BCS GM writes.
In the meantime steels (33%) is the primary candidate for underperformance, while retail is mostly disliked, but still has a few fans, BCS GM notes.
"There was not a single bet that Steels would outperform, with one out of three investors calling it a top future underperformer. Retail was next, with 27% expecting it to lag and only 10% naming it a candidate for a beat. Twenty percent named Gas as a likely underperformer, while 7% named it a favourite," the survey shows.
Russia’s equity markets are the best performing in the world year to date with the benchmark MSCI Russia index returning 44% as compared to MSCI EM (emerging markets) gain of 12% and developed markets growth of 22%, Cole Akeson of Sberbank CIB told RBC business portal in November.
Compared to 2018, in US dollar terms, the yields on MSCI Russia soared 80-fold, as the index grew by 0.51% last year, Alfa Bank analysts estimated. At the same time the local indices — the ruble denominated MOEX Russia Index and the dollar denominated Russia Trading System (RTS) — are also both trading at multiyear highs.
This year has been one of the most successful ever for the stock market. Over the first ten months of 2019, the ruble denominated MOEX Russia index rose 18% and October alone saw 9% growth. In the second week of November the MOEX index broke through 3,000 points for the first time.
The dollar denominated RTS index has also been doing well and was up just short of 40% as of November 8 YTD.
Russian equity market capitalization is now half of what it was at the peak in 2008 at over $1.5 trillion and now is only at $663bn or 3.8% of the MSCI Emerging Market Index. In terms of total EM capitalization, Russia stands at 0.7% compared with 0.9% for Brazil and 2% for India and 11.6% for China.
Russia's Market Capitalization accounted for 34.8% of GDP in December 2018 according to the World Bank. US in comparison is now at 146.3% stock market cap to GDP ratio.
Traders cite four main reasons for the bull run:
● Increased profits and easing geopolitical tension​. “It is difficult to call this ‘euphoria’: the process didn’t begin a month ago but back in 2015,” said Alfa Capital analyst Vladimir Bragin. Now, according to Bragin, a calmer geopolitical situation is accelerating growth and major Russian companies are posting higher profits.
● Generous dividends​. An analyst at Raiffeisen Bank, Andrey Polischuk, said growth was being driven by new dividend policies. In 2018, dividends were 1.5 times more than the year before, with state-owned gas monopoly Gazprom having the largest increase. Under pressure from the government, the gas giant this year agreed to pay shareholders 50 percent of net profit ($6.5 billion) — more than double the amount it paid out in 2018.
● Betting on oil.​ Another driver of growth is fading fears of declining demand for oil. Investors were calmed by the news that President Donald Trump will likely come to a trade agreement with China and by Britain’s progress toward Brexit. Less demand for oil is one of the main worries for those buying Russian shares.
76​ RUSSIA Country Report​ December 2019 ​ ​www.intellinews.com