Economic momentum will not stabilize until after the second half of the year, so there is no need to be pessimistic about Russian financial markets.

Due to the large-scale spread of the epidemic around the world, the momentum of the Russian economy is expected to decline sharply in Q2. However, at present, many emerging Asian countries have successfully brought the epidemic under control, and emerging markets have also benefited from the revitalization and development of Internet, technology, consumer and other "new economy" enterprises during the COVID-19 epidemic. Overall stock valuations have risen, and it is possible to expand the current stock market rally for the rest of this year and 2021.

Although the global real economic recession is inevitable this year, there is no need to be too pessimistic about Russian financial markets in the context of massive easing by central banks to stimulate the economy. In order to resist the impact of the epidemic on the domestic economy, the Russian central bank has cut interest rates to 2.0% this year, a total of 2 percentage points, while the market expects that there is still room for further interest rate cuts of 0.25% in the future. According to the observation of the historical trend in the past, the interest rate level of the Russian central bank is inversely related to its stock market, and the Russian stock market should have room to continue to rise under the loose monetary policy.

The level of Russian state and corporate debt is on the low side.

The debt is significantly lower than that of other countries: compared with the major mature and emerging countries in the world, the debt level of both countries and enterprises in Russia is significantly lower. The proportion of national debt to GDP is only 14.6%, which is much lower than that of mature countries such as the United States, Japan and the United Kingdom, and the proportion of net corporate debt to EBITDA is less than 0.5%, which is lower than the global and emerging market average. Therefore, even if the impact of a larger financial event occurs, there is no need to worry too much about events such as capital flight or asset sell-off. Russia's real economy is strong enough to withstand short-term shocks without being hurt too much.

The stock interest rate is relatively attractive, and the proportion of market funds is high in the Russian stock market.

The proportion of market funds overweight Russia is high: in the past, Russia's dividend yield has continued to be the highest among major emerging countries, while as of recent market estimates, Russia's average expected dividend yield for the next three years is about 9%. It is an important factor to attract the parking of market funds. According to statistics, 77 per cent of the global emerging market funds rated by Morningstar five stars hold a view that the Russian stock market keeps increasing its (Overweight) holdings, while only a small proportion of them have reduced their holdings or held the same view.

France-Pakistan Russian Stock Fund-- A Stock selection Strategy that can advance, attack and retreat

The Fund is the largest Russian equity fund in the world, with a size of 1.027 billion euros (source: BNPP AM; as of 2020-07-31). It mainly invests in shares issued by Russian enterprises or companies operating locally in an effort to increase the value of their medium-term assets. And operated by the Russian local investment team, close to the Russian local market, in view of political, economic, enterprise and other dynamic news to grasp the first-hand investment opportunities.

Funds select companies with high interest rates and high free cash flow, and also focus on enterprises with low leverage, so they have a higher proportion of public utilities and communications services stocks, which can be attacked and retreated in order to maintain the style of sound allocation. At the same time, it aims at large and medium-sized shareholdings to effectively reduce the fluctuation of investment in a single country. The fund adopts a "Bottom-up bottom-up" stock selection strategy; the industrial layout is high kinetic energy reward energy, finance and defense potential industries; and with the increase of industrial production activities, it will benefit from the trend of industrial profits and achieve long-term capital gains.

From the perspective of industry distribution, the fund mainly invests in energy, materials, communications services, essential consumer goods, finance and other industries.

As of October 30, 2020, the top five positions in the fund were Lukoil, Gazprom, Anglo-Russian Precious Metals Mining Company, Russian Federal savings Bank and Russian Energy holding Company, with the top ten positions accounting for 54.63%.

This year, in the face of the impact of the epidemic and sharp fluctuations in energy prices, the Fund maintained a sound style, with volatility and maximum pullback lower than similar averages and indices. As of September 30, 2020, the three-year cumulative rate of return of the fund reached 7.88% and the five-year cumulative rate of return was 72.20%.

Backed by the world's top financial institutions

BNP Paribas Asset Management, founded in 1968, is the investment management business of BNP Paribas, a large international financial institution, and ranks among the top 30 fund companies in the world. to provide leading and high-quality investment solutions for individual, corporate and institutional investors. It provides customers with a wide range of investment solutions, including stocks, fixed income, private debt and physical assets, multiple assets and quantitative solutions. Paris Asset Management, France, regards "sustainability" as the core of strategic and investment decisions, actively contributes to energy transformation, environmental protection, equitable and inclusive growth, and is committed to providing clients with a long-term sustainable return on investment. As of September 30th, Paris Asset Management, France, has assets under management of 445 billion euros. It has more than 500 investment experts and nearly 500 customer service specialists to provide professional services to individuals, enterprises and institutional investors in 71 countries and regions around the world.

VladimirTsuprov, the chief investment officer who manages the fund, graduated from St. Petersburg University and has 22 years of experience. Prior to joining France-Pakistan Capital Management, he worked as a junior analyst at Incombank and then became chief investment officer of TKB Investment Partners in 2005 after working for seven years at a number of Russian banks.

Paris Asset Management, France, believes that although the COVID-19 epidemic has caused a sharp decline in global crude oil demand compared with last year, under the measures taken by most countries to lift the blockade one after another, the recovery of economic momentum has also led to a pick-up in crude oil demand from low levels. And Russia's fiscal surplus can be generated under the fluctuation of oil prices in 2019, coupled with the large-scale easing policies implemented by major central banks around the world, there is no need to be too pessimistic about Russian financial markets.