Russia is a winner from the energy imbalance we are witnessing now where the price of both liquid natural gas and crude is shooting up. The popularity of the green shift/ESG investing has diverted capital away from oil and gas and related fossil fuel producers along with earlier predictions of very low energy prices for the medium term. These major energy producers effectively gave up as they got discouraged to invest and ended up giving outsized payouts to shareholders. We see the results now with oil going from $20 per barrel last year to around $80 now, a fourfold move within an 18 months period. Russia should continue to benefit from the re-pricing in the energy sector.
It was a challenging quarter for China given fears of a potential slowing of China’s economy due to severe coronavirus controls and tight curbs on property after the real estate giant Evergrande ran into trouble and faced potential debt default. On top of this, extensive power shortages also gripped large parts of China. The combination of these factors has led to sharp cuts in near-term growth forecasts for China.
Indian equities gained in September compared to the global equity sell-off as both foreign and domestic investors were net buyers after India reported in August its year-over-year Q2 GDP numbers grew by over 20%. We reflect on that these strong numbers are generated with a reduced lockdown economy and that it is more upside ahead as the economy continues to reopen.
Source: Bloomberg LP