RUSSIAN REAL ESTATE: The Best Exposure to Falling Interest Rates

We initiate coverage of Russian residential developers LSR Group (BUY), Etalon Group (BUY), and PIK Group (HOLD). Equity investments in the residential real estate sector are an attractive opportunity to gain exposure to the broader Russian macroeconomic recovery, and mortgage rates that are falling as inflation slows and the Central Bank of Russia cuts rates. Within a few years, we believe that mortgage rates should decline to 8.0-9.0%, which would be a record low in modern Russia. This can be ...