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Yandex set for MSCI index after strong COVID-19 performance -analysts

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  • YNDX

By Alexander Marrow

MOSCOW, Aug 12 (Reuters) - Shares in Russian internet giant Yandex have traded near a record high in recent days, buoyed by optimism for technology stocks and ahead of the company's expected inclusion in the MSCI Russia index on Wednesday.

Yandex's core advertising business has taken a hit during the COVID-19 pandemic but surging interest in online has allowed other segments of its business to flourish, including food delivery and e-commerce.

Analysts said Yandex's inclusion would be the biggest event for the MSCI Russia index in recent history.

It is set to become one of the top four or five stocks in the index, with an expected weighting of around 8%.

Market capitalisation, capitalisation adjusted for free-float and liquidity level are the three main criteria for inclusion in an MSCI country index, said Iskander Lutsko, chief investment strategist at ITI Capital, in a note.

August inclusions are rare, as the threshold is higher, but liquidity of Yandex shares on the Moscow Exchange has increased and its share price in New York and Moscow hit a record high last week.

Its market capitalisation in New York is currently $19.95 billion.

General optimism to the IT sector in recent months and increasing talk about Yandex's MSCI inclusion have driven this growth, said Maria Sukhanova, TMT analyst at BCS Global Markets.

"The consensus is that Yandex will get in," said Erik DePoy, equity strategist at Gazprombank. "MSCI tends to give the benefit of the doubt in certain cases.

"Local trading volumes have been the final piece of the puzzle for the stock's inclusion."

Yandex declined to comment ahead of the decision being taken.

With Yandex rival Mail.Ru a contender for November inclusion, Yandex's addition could help investors start to believe that Russia is on track to diversify its commodity-dependent economy.

"It represents a symbolic moment in terms of internet and technology companies becoming a bigger part of the Russian economy," said Anna Kupriyanova, lead TMT analyst at Gazprombank. (Additional reporting by Nadezhda Tsydenova; editing by Jason Neely)