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Politics are a worry

The Russian stock market fell slightly in September, but the weakening of the krona during the month meant that the decline in SEK was not dramatic. Carnegie Rysslandsfond fell 0.4 percent.

The Russian economy recovered steeply in June and July, driven primarily by increased consumption, but this now appears to be coming to an end. August figures indicate that the pent-up demand that existed after the lockdown in April and May is no longer enough. Industrial production in August, for example, was down 7.2 percent on an annual basis.

The Russian central bank has published its long-term plan for monetary policy. It expects to continue its stimulus into 2021 and the first half of 2022. From the second half of 2022, it believes that monetary policy will take a neutral position.

In addition to the assassination attempt on Navalny and the political unrest in Belarus, we now have another political event to worry about; a new war between Armenia and Azerbaijan has flared up in Nagorno-Karabakh. Turkey very actively supports the Azerbaijani side and Russia may feel obligated to support the Armenian side. If things go wrong, we may soon have a conflict between Russia and Turkey that would benefit nobody.

The Russian government has proposed increasing taxation in the oil and mining sectors, which is of course negative for all companies in these sectors. The tax burden on the oil sector will increase by about RUB 200 billion in 2021. The worst affected oil companies are Tatneft and Gazpromneft. The mining sector is expected to pay an additional RUB 161 billion a year to the Treasury.

Internet company Yandex and fintech company TCS Group have agreed that Yandex will buy TCS. The purchase price is USD 5.48 billion to be paid in cash and shares. This represented a premium of 8 percent at the time of the announcement and the market has mainly been positive about the deal.

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