Dividend season this year: not too heavy but to keep in mind
The relatively favorable current account of 5M21 combined with the global weakness of the US dollar, strength in commodities, a calm news flow on foreign policy and the hawkish stance of the Bank of Russia (the latter is likely to ‘making at least a 50bp hike on Friday) created more favorable conditions. for the ruble, than we initially expected, at least for the next two weeks.
Nonetheless, for the rest of the summer and 3Q21, we remain cautious, in large part due to the corporate dividend season, which this year for the biggest payers runs from mid-May to early August. Normal practice is a higher demand for RUB before payment, followed by an increased demand for foreign currency linked to the conversion in favor of non-resident shareholders. Most of the payments are made to strategic and institutional investors.
According to the payment schedule (Figure 2), after the first round of dividend payments in May, the Russian market still has two months of payments. According to our estimates, this year’s dividend period will result in the payment by the largest companies of RUB 1.5 tr in May-August, with around US $ 7 billion of this amount attributable to non-residents (Chart 3). This volume is more modest than the previous year (in 2019, for example, the figures were 2.0 billion rubles and 9 billion US dollars respectively, respectively) and is due to the decline in overall corporate profits in 2020. following the Covid crisis. -related decline. At the same time, payouts should still be noticeable in the slow summer trading pace, and we expect dividend seasonality to show up this year as well.