(In Russia, coverage of Russian military operations in Ukraine is restricted.)
Ostroukh, Andrey According to a Reuters survey of ten market experts, Russia’s stock market will recover part of its 2022 losses by the end of the year. The market fell significantly after Moscow sent soldiers into Ukraine, provoking western sanctions.
Russian equities rose from the second quarter of 2020 until October 2021, when a huge sell-off wiped out 56% of the rouble-denominated market capitalization.
The benchmark MOEX index, which is based on the rouble, is expected to recover to 2,500 by the end of the year. This is 12.2% higher than its level on Monday, which was 2,228.11, but a long way from the 4,350 predicted by the last Reuters Russian market poll, which took place in December.
The MOEX reached 4,292.68 in mid-October 2017.
Since Moscow’s “special military operation” in Ukraine on Feb. 24, the commercial landscape has shifted dramatically. Risk aversion has risen, but fundamentals like a strong oil price have supported the market.
Russia stopped international investors from trading stocks, which cut off the flow of money from outside the country. Now, the market is mostly driven by a rise in domestic retail investors.
Moscow Exchange, Russia’s main bourse, is considering letting “friendly” countries that haven’t sanctioned Russia to return. Stocks could tumble, say analysts.
“The major risk for the Russian stock market in the coming months is a probable return of non-residents from ‘friendly’ countries, who are fewer than investors from ‘unfriendly’ countries but can sell shares prohibited since February,” said Veles Capital analyst Elena Kozhukhova.
Reuters’ August survey predicted MOEX index readings of between 2,400 and 3,700 in late 2023.
The dollar-based RTS index was expected to reach 1,279 points by year’s end, up 9% from Monday’s close of 1,173.79.
Gazprombank equity strategist Erik DePoy said the odds of another huge sell-off were minimal because the Russian equity market is largely detached from global market sentiment.
“There seem to be few downside catalysts,” DePoy added.
Analysts saw upside for the Russian market in hopes that tensions won’t worsen.
Natalia Milchakova, a well-known analyst at Freedom Finance Global, said that sanctions risks should be priced in by the end of the year, and geopolitical risks may go down.
Andrey Kochetkov, an analyst at Otkritie Investment, said, “The risks are more to the upside because we think geopolitics will move toward diplomacy.”
(Other Reuters Q3 poll stories include:
(Andrey Ostroukh contributed reporting, and Jan Harvey edited the piece.)
