Page 82 - RUSRptApr17

8.3.1 Equity market dynamics
For every $100 invested in Moscow-listed companies, shareholders will get back $17 in the form of corporate profits over the next 12 months , according to analyst estimates compiled by Bloomberg. That’s twice the returns they can earn from Russian sovereign bonds or broader emerging-market stocks. Earnings estimates for Russian companies are rising at a faster pace than for the rest of the developing world, taking the spread between the two to the widest since November 2014, weeks before the Bank of Russia opted for an emergency rate hike to save the ruble. The dollar-denominated RTS Index trades at 5.79 times the projected earnings of its members. While that’s the cheapest among major developing nations, the price-earnings ratio relative to the MSCI Emerging Markets Index is falling even after Russian stocks rallied 47% in the past 27 months. The MSCI gauge is little changed in the period.
Russian stocks lost all their post-US election gains in local currency terms, as rising tensions between Russian and the USA in the wake of the US air strike on Syria on April 9. The strike in the early hours of the morning had an immediate impact on Russian markets, and they have continued to suffer the following week as the tensions showed no sign of receding.
In 2017 Russian listed companies are to distribute RUB1.56 trillion ($27.3bn), up +21% from 2016, as dividends. The final 2016 dividend distribution season could bring in some RUB1.13tn, 72% of total 2017 distributions, VTB Capital said in a note.
“We estimate the 12mo dividend yield at 4.9% for the RTS. On the governance front, state-owned enterprises (SOE) dividends are still a hot topic. So far, there is no clarity as to whether the government will publish a new 50% payout directive or examine each SOE as a separate case, while setting a
82 RUSSIA Country Report April 2017 www.intellinews.com