Tough month for Russian market
November was a terrible month for the Russian market. Russian military build-up along the Ukrainian border led to a sharp increase in geopolitical risk.
Investors sitting on big profits in Russia took the opportunity to sell off and the stock market fell sharply. What the increased tension along the Ukrainian border is due to, and what the build-up is aimed at, are still unclear, but for the stock market the damage has probably largely already been done. Shortly after, came news of the Omicron virus from South Africa, and Russia was dragged into the global stock market slide. Carnegie Rysslandsfond lost 5% during the month.
In addition to the market’s concern about the immediate situation in Ukraine, it is also worried about possible extended sanctions. US Senator Menendez has proposed legislative changes that would give the President greater freedom to impose harsh sanctions on Russia if it escalates the situation in Ukraine.
Gazprom issued strong numbers, but these were largely expected. The autumn has been cold and demand remains high, both in Europe and in Asia. The high gas prices are holding up and the company is now in a perfect situation. Its cash flow will continue to be strong and we expect a dividend of between 15% and 18%.
InterRao published fine results, as did Lukoil and Gazpromneft. Transneft also exceeded expectations somewhat.
The United States is so concerned about oil prices that it has released oil from its strategic reserves. A few other countries have also decided to ease their reserves, including the United Kingdom and India. The oil price did not react significantly to this.
Sberbank held a conference on its sustainability strategy. The company highlighted a number of sustainability goals for 2023, including increased focus on reducing environmental impact (reduction of scope 1 and 2 emissions), sustainable financing (500 billion roubles in green loans) and a focus on cybersecurity. What is clearly missing, however, is the governance aspect. Sberbank points to sustainability as the most important aspect of its medium-term strategy.