Investment Outlook Second Quarter 2020 Update

• Probably deepest economic contraction since 1930s, but may be brief due to large policy support;
• Coronavirus can and likely will be controlled based on experience of China and S. Korea;
• Unprecedented monetary/fiscal response globally;
• Markets usually hit their low 3-4 months before recessions end;
• The market could have already bottomed or might bottom by end-May;
• Second virus wave Autumn/Winter - equity markets might experience a second down leg;
• Oil 30/40/50 bear/base/bull cases with 30%/40%/30% probabilities;
• According to our estimates, the current ruble exchange rate of about 80 rubles / $ is already priced-in a bear case of $ 30 / barrel;
• At the same time, the current level of the key interest rate (6%) does not reflect the bear case with oil prices of $ 30 per barrel and may rise.

Investment Preferences