Page 19 - RusRPTNov21

$80mn outflows during the previous week. Russian dedicated funds saw even more: inflows of circa $70mn, up from $30mn the week before – the best result since March.
“Global energy rally finally brought quality money into Russia traditional funds at a pace unseen since the start of the pandemic, while EM stocks also attracted new cash,” said Slava Smolyaninov, head of strategy at BSC GM, in a note.
“Active Russia-dedicated funds enjoyed [their] best weekly inflows since pre-pandemic January 2020 as they registered a net weekly intake of $100mn,” Smolyaninov continued. “The largest inflows came into funds managed by Pictet followed by the VTB Russia fund and Sberbank fund focused on natural resources. These intakes easily outweighed outflows from ETFs led by $32mn out of the RSX ETF and even $5mn out of the levered Direxion Russia Bull 2x fund.”
Russia’s market is being lifted as well as inflows into global emerging market equity funds, which also saw a solid inflow of $1.5bn in the same week – the best since August – and have enjoyed positive inflows for nine weeks in a row now.
The retail investors are playing an increasingly important role in the ebb and flow of funds. MOEX published its retail investor statistics for September: retail inflow picked up to RUB35bn ($481mn), rising from the previous month's RUB28bn and coming in line with the YTD monthly average, Sberbank reports. That is $120mn a week equivalent, on a par with the international inflows of the last week, giving the market added momentum.
BCS GM reports that while there was a correction last week as investors took some profits, especially from the banking sector stocks, Russian retail investors took advantage of the dip to buy into the weakness and start the ball rolling, only to be joined this week by international investors.
“Inspired by a powerful energy shortage in Europe, Retail bought into outflows from Russia and EM ETFs to propel the market higher. We see negative flow momentum building again, but we stay positive in the long run,” Smolyaninov said. “Retail en masse has been right to aggressively add to their net Long positions through September, enjoy the energy-driven rally and remain a buyer despite the market hitting new highs every other day and the worrisome technical picture signalling short-term overbought conditions. This differs from the more opportunistic behaviour typical of Retail in the past years, when they usually sold into such strong market upticks.”
Analysts are optimistic about the outlook for the rally to continue. October is when the traditional “Santa Rally” begins, as Russia’s equity market is prone to seasonal rallies caused by tax payments and fund allocations amongst major funds.
The Santa rally runs over the fourth and first quarters ahead of the dividend payment season in August and then sells off after the dividends are collected, only to start rallying again as the weather gets colder. New mandates issued at the start of the year by major funds also contribute to these rallies.
19 RUSSIA Country Report November 2021 www.intellinews.com