Russia: Dividend payments ahead, favouring cautious RUB view
May-August is the high season for corporate dividends in Russia. According to the corporate announcements, this year, around RUB2 trillion is to be paid
Executive summary
- May-August is the high season for corporate dividends in Russia. According to the corporate announcements, this year, around RUB2 trillion is to be paid. We estimate that 31% of this sum, or RUB0.6 trillion, could potentially be converted into FX, an equivalent of about US$9 billion. July is the heaviest month in terms of payments, with 40% of the total sum, including 34% of FX portion, due.
- How dividends affect Russia’s balance of payments: the payments to non-resident shareholders are outgoing investment income. That puts pressure on the current account surplus in June, which results in a halt in the accumulation of foreign assets by corporates in June and is followed by accelerated net capital outflow in 3Q.
- Even though we acknowledge the stronger-than- expected rouble performance in 2Q19, which we attribute to strong inflows into OFZ bonds and a stronger-than-expected current account, we maintain our expectations of USD/RUB shifting to a RUB65-67 range in the coming months.
- The experience of 2012-18 suggests that the average RUB depreciation during May-August is 8%. The main bulk of this takes place in July-August depending on other factors, including the oil price, emerging market risk appetite and rhetoric around sanctions.
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This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more