Sectors of the Russian market: what it is made of

The Russian equity market is built asymmetrically, and understanding that structure explains its behaviour better than examining individual securities does.

The commodity core

Oil and gas together with metals account for a large part of capitalisation and an even larger part of turnover. Their revenue is in foreign currency, their costs are largely in roubles, and the result depends on world commodity prices — Exporters and the exchange rate: who gains from a weak rouble.

The financial sector

Banks are sensitive to interest rates and to the quality of their loan books. Unlike industrial companies they use different accounts and different multiples: comparing a bank with a manufacturer on revenue is meaningless.

Domestic sectors

Retail, telecoms, utilities, transport. Their revenue is in roubles, demand is domestic, and their relationship with the exchange rate is the inverse of the exporters'.

Utilities are separately exposed to tariff regulation: rising costs are passed into prices by a decision rather than by the market.

The technology sector

Smaller by weight and younger by history. It is valued on growth expectations, which makes it more rate-sensitive: when money is expensive, distant future profits are worth less today.

How to check your own portfolio

Add up the sector weights, then look separately at how much of the portfolio's underlying revenue depends on a single factor. Related: Sector sensitivity: who reacts how to macro conditions.