Sberbank CIB Trade Ideas - January 27, 2020

Russian equities delivered spectacular returns in 2019 and have started 2020 on a high note. We believe the ongoing decline in interest rates and high dividend payouts will help Russian stocks to continue outperforming. In this issue of Sberbank CIB Trade Ideas we open two trade ideas and close one. > Adding X5 Retail Group. A few days ago, we added X5 to our trade ideas list. We believe that the stock's recent weakness and its underperformance versus Magnit have created a good buying opportunity. Moreover, sector fundamentals are set to improve thanks to the government's announced boost to social spending. We expect Magnit to scale back its promotions soon, with Pyaterochka picking up some of the resulting traffic outflow.> Adding Etalon Group. The company recently announced that it has applied for a listing on the Moscow Exchange. We believe this will be a major driver for the stock. The absence of a local listing is one of the reasons why Etalon has been trading at a discount to LSR Group. We expect Etalon's liquidity to get a big boost from the listing, which should grab the attention of some global investors who have been put off by the stock's low liquidity.> Closing Yandex. The stock has delivered since we opened this idea in February last year, gaining 38%. Since the triggers we had been expecting have materialized, we are closing the trade idea. We remain positive on the company's long-term fundamentals and maintain our BUY recommendation on the stock.> Past updates to our trade ideas list. Since the previous edition of this report, published at the end of last October, we have closed trade ideas on X5 Retail Group (but reopened it on January 21), QIWI, OGK-2 and Aeroflot.