September 26, 2022

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Russian shares to pare some heavy losses by year-end – Reuters ballot

(This content material was produced in Russia the place the legislation restricts protection of Russian...

(This content material was produced in Russia the place the legislation restricts protection of Russian army operations in Ukraine)

By Andrey Ostroukh

MOSCOW (Reuters) – Russia’s inventory market will pare a few of its heavy 2022 losses by the tip of the yr, in response to a Reuters ballot of ten market specialists, having fallen sharply after Moscow dispatched troops into Ukraine, triggering sweeping western sanctions.

Russian shares had been on the rise for the reason that second quarter of 2020 and hit a report excessive in October 2021, earlier than a large sell-off erased 56% of the rouble-denominated market capitalisation within the first two months of 2022.

By the tip of this yr, the benchmark MOEX rouble-based index is anticipated to have recovered to 2,500, 12.2% above Monday’s shut of two,228.11 however sharply beneath the 4,350 predicted by the final Reuters Russian market ballot revealed in December.

The MOEX reached a report peak of 4,292.68 in mid-October final yr.

This yr, the market panorama has modified drastically since Moscow started what it calls a “particular army operation” in Ukraine on Feb. 24. Threat aversion has soared however some fundamentals, reminiscent of a robust worth of oil, Russia’s foremost export, have underpinned the market.

Russia additionally banned international traders from buying and selling shares, shutting off exterior liquidity, and a surging variety of home retail traders have develop into the primary driving energy in the marketplace battered by unprecedented western sanctions.

Moscow Trade, Russia’s largest bourse, is now contemplating permitting traders from designated “pleasant” nations that imposed no sanctions in opposition to Russia to return to the market. Analysts warn this might hammer shares.

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“The principle threat for the Russian inventory market within the coming months is a potential return of non-residents from ‘pleasant’ nations, that are fewer than traders from ‘unfriendly’ nations, however nonetheless can start promoting shares blocked since February of this yr,” stated Elena Kozhukhova, an analyst at brokerage Veles Capital.

Forecasts for the MOEX index studying in late 2023 within the August Reuters ballot assorted from 2,400 to three,700.

The dollar-based RTS index was forecast to commerce at 1,279 factors by year-end, up about 9% from Monday’s shut of 1,173.79.

Gazprombank fairness strategist Erik DePoy stated possibilities of one other main sell-off have been low because the Russian fairness market is basically disconnected from world market sentiment, excluding oil and metals costs.

“Assuming no different main exterior shocks, there appear to be few draw back catalysts,” DePoy stated.

Analysts additionally noticed some upside for the Russian market in hopes relations between Moscow and the West gained’t worsen additional.

The affect of sanctions dangers needs to be priced in by the year-end and a few easing in geopolitical dangers is probably going, stated Natalia Milchakova, a number one analyst at Freedom Finance World.

“Dangers are principally skewed to the upside as we hope that the geopolitical state of affairs will development in direction of diplomacy as an alternative of power,” stated Otkritie Funding analyst Andrey Kochetkov.

(Different tales from the Reuters Q3 world inventory markets ballot bundle:)

 

(Reporting and polling by Andrey Ostroukh; Modifying by Jan Harvey)