Top stories in the Russian press on Tuesday, December 15, prepared by TASS

Nezavisimaya Gazeta: Experts list major economic challenges of 2021

Economists believe that the possible inefficiency of mass vaccination and new waves of the coronavirus pandemic will be the main challenges holding back economic recovery in many countries in 2021. Moreover, widespread poverty and protests may bring crucial changes to current redistribution policies, Nezavisimaya Gazeta notes.

The further spread of COVID-19 is the main risk that 2021 will bring, Director of the Center for Market Studies at the Higher School of Economics Georgy Ostapkovich pointed out. In this regard, mass vaccination can boost economic recovery. Otherwise, "lockdowns will reduce business activities," Associate Professor at Plekhanov Russian University of Economics Diana Stepanova added.

Besides, restrictions are negatively affecting workforce productivity, Ostapkovich said. Even if vaccinations prove effective, many industries, namely the public catering and the hospitality sectors, will need a long time to recover. At the same time, the expert expects investment in the pharmaceutical industry to grow. "Healthcare is becoming the new oil," he said.

Another risk that 2021 will bring comes from the possibility of a financial crisis. "Aggressive quantitative easing measures taken by central banks have led to a temporary decline in sovereign and corporate bond yields. The process threatens to reduce confidence in the leading global currencies and, consequently, in sovereign debt," leading analyst at Otkritie Broker Andrey Kochetkov warned.

Director of the Russian Academy of Sciences' Institute of Economics Ruslan Grinberg sees the increase in poverty and mass protests to be the main risk of 2021. "It will require resource redistribution efforts," he said.

Meanwhile, according to Stepanova, the main threat that Russia is going to face in 2021 will first and foremost come from new US sanctions.

Nezavisimaya Gazeta: India gears up for two-front war

According to official sources cited by the Indian media, the country’s armed forces are urgently replenishing ammunition and weapons, gearing up for a possible war with China and Pakistan amid Beijing’s military buildup along the disputed border in the Himalayas and tensions in Kashmir. Experts believe that only Russia can quickly meet India’s demand for military equipment, Nezavisimaya Gazeta writes.

It seems that the emergency steps that India has taken largely stem from the growing defense cooperation between China and Pakistan.

According to Consultant Editor at the India Strategic monthly Vinay Shukla, New Delhi has had a 15-day war doctrine in its pocket for a long time now. "This is how long it will take the army to accomplish its objectives. We don't have a defense industry that would allow us to carry out military activities for longer than 15 days. We have to send equipment to Russia for repairs," he pointed out. "However, relations between India and Russia aren't that smooth. Trilateral meetings have taken place between India, Russia and China, but China contiues to stage provocations against India. We expected Russia to influence China and urge it to show restraint but Russia is silent. It seems that Russia has become dependent on China," the Indian expert concluded.

Timofei Borisov, a researcher at the Center for Analysis of Strategies and Technologies, told the newspaper that "in fact, India developed a two-front war strategy back in the 1960s." "Media reports don’t mean that a war is expected to break out in the coming days but they make it possible for the armed forces to replenish stocks and express concern about the situation on the border," he added. "Nevertheless, it will be difficult for India to purchase a large amount of weapons. All state agencies, including the Defense Ministry, had to cut their spending due to the pandemic so the ministry will have to rely on domestic arms manufacturers. As for foreign parnters, Russia enjoys competitive advantages because it is the only country that is capable of providing India with the military hardware that it needs on short notice. Besides, Western-made weapons are far more expensive than Russian ones," the expert emphasized.

Izvestia: Chinese economy boosts fuel demand

The Organization of the Petroleum Exporting Countries (OPEC) has reduced its projected global oil demand for 2021, pointing out that the impact the coronavirus pandemic would have on Europe's demand for fuel in the first half of the year was unclear. However, experts are confident that Organization for Economic Co-operation and Development members, namely, India and China, will ensure a surge in demand in 2021. In November, China's economy pushed US LNG prices up by 20% and made Russia the world leader in oil supplies, Izvestia writes.

The expected decline in oil demand is explained by the lockdowns that European Union countries are introducing for the holiday season, WMT Consult Managing Partner Ekaterina Kosareva pointed out. "Nevertheless, it’s hard to say at the moment if a number of European countries will extend the lockdowns. This is where all the uncertainty comes from. I don’t rule out that the projected demand will grow in a month," Kosareva added.

Meanwhile, daily oil imports have exceeded the 11-mln-barrel mark thanks to the activities of Chinese independent oil refineries, given that the figure stood at 10.1 mln in October. However, OPEC said in its December report that in 2021, oil demand would depend on US policies, the situation around Brexit and trade talks, primarily with China.

All the above-mentioned factors will influence the hydrocarbon market in the first half of 2021, but only one will be able to make the market situation more stable, and that is the distribution of coronavirus vaccines and their effectiveness, Raiffeisenbank analyst Andrei Polishchuk noted. "Only real signs of economic recovery in countries will boost confidence on the oil market," the expert emphasized.

Rossiyskaya Gazeta: Russian stock market sets records in hopes of victory over pandemic

The Russian stock market is growing for the seventh consecutive week. This positive trend is strengthened by a rise in individual investors, whose number more than doubled in the past 11 months, reaching eight million, Rossiyskaya Gazeta writes.

"As soon as news started coming about vaccine supplies, we saw an increase in market activities and expect more new investors to enter the market than the same period in previous years," Head of Investment and Brokerage Services Development at Tinkoff Investments Anton Kitsun noted.

According to Head of Market Analysis at Otkritie Broker Anton Zatolokin, there are several factors that are boosting Russian asset prices, most of which are long-term and fundamentally based. These include low base rates across the world and expectations that vaccinations will pave the way for a victory over COVID-19.

The market expects that trade wars will end once Washington’s policy changes, which has already led to an influx of portfolio investment into developing markets. Interest rates in Russia are declining, and there have been no new sanctions, while the low cost estimates of Russian assets only boost their attractiveness for investors.

The medium-term economic growth potential, created by the end of 2020, is one of the strongest in the past 25 years. However, that doesn’t mean radical changes aren’t on the horizon. They may take place, first and foremost, if there is no progress in the fight against the pandemic and new sanctions initiatives against Russia come up after Joe Biden takes office as US president, Zatolokin noted.

Kommersant: Russian retailers expect sales to grow ahead of holiday season

Analysts are pointing to a rise in customer activity in Russia ahead of the holiday season. Market participants expect that customer traffic will recover to 85% of the pre-crisis level in the last month of the year, Kommersant writes.

The Shopping Index based on the number of customers per 1,000 square meters of retail space at Moscow's shopping malls rose by 4% in the first two weeks of December compared to late November. Watcom Group President Roman Skorokhodov attributes the positive trend to the upcoming holiday season.

Although the overall situation remains cloudy, retail operators stay positive. Commercial real estate analyst at Accent Capital Anastasia Kostomakhina expects customer traffic to recover to 85% of the pre-crisis level before the new year.

Research analyst at Cushman & Wakefield Yevgenia Safonova has no doubts that retaliers will see a surge in sales in December though the total sales volume will be lower than the year before.

Retail Real Estate Manager at Knight Frank Yevgenia Khakberdiyeva expects, however, that the fall will be minimal. "People have grown tired of the lockdown and will flock to shopping malls looking for a certain atmosphere," she said.

Director of the Retail Space Department at CBRE Marina Malakhatko predicts that the average retail turnover will drop by 9% this year. According to her, customer activity always grows during the holiday season, even in the years of crisis. Today, however, there is an additional negative factor for shopping malls as the share of online sales has grown up to 30%, the expert pointed out.