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Coronavirus infects Moscow exchange

The continued spread of the coronavirus at the end of February caused world stocks to fall sharply. The Russian market was no exception, falling a full 14 percent in Swedish kronor over the month. The Russian rouble also fell and corrected by over 4 percent against the krona after having been very strong in the past year.

January inflation surprised on the downside at an annualised 2.4 percent. At its January meeting, the central bank lowered the key rate by another 25 basis points to 6 percent. It did not change its forecast, which remains at 3.5-4 percent for the full year. We believe the forecast is too high, and we expect more cuts this year.

As expected, steel companies NLMK, Severstal and MMK reported rather weak figures for the fourth quarter of 2019 due to softer global steel prices. However, the companies are still very strong and have the capacity to pay high dividends.

Two big banks, Sberbank and VTB, both issued pretty good reports; Sberbank exceeded expectations while VTB came in as expected. Internet companies Mail and Yandex also reported. Mail’s numbers came in pretty much as expected while Yandex was something of a disappointment.

Gazprom’s gas production in January fell 6 percent compared to January last year due to the warm winter in Europe and adjustment of production to lower European demand. Gazprom also announced that it will in future pay out a larger share of its profit, which of course was interpreted favourably.

The US is imposing sanctions on one of Rosneft’s subsidiaries, Rosneft Trading. These are a direct consequence of the company’s involvement in Venezuela. The fund has no exposure to Rosneft.

Regarding sanctions, it is worth noting that three US senators, including Minority Leader Schumer, have written a letter to President Trump calling for new sanctions on Russia for interference in the ongoing presidential campaign. However, it is unclear what this means and what it could lead to.

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