Tserazov Konstantin: the main fundamental problem for the Russian stock market remains the expensive ruble

2024-06-12 15:14:44 Время чтения 6 мин 146

In the week from June 3 to June 7, the Moscow Exchange Index grew by 0.5%, and the RTS Index by 1.6% after a collapse the week before by 5.3% and 5.8%, respectively. Thus, shares of Russian companies have risen in price both in rubles and dollars.

Konstantin Tsearzov

The culmination of the two-week sell-off took place on Monday: the market opened with a downward gap and declined until lunchtime, after which a correction began that lasted until Friday inclusive. The volume of stock trading on the Moscow Exchange on Monday amounted to 135 billion rubles. (record value since March 20), and in June futures for the Moscow Exchange index - 137 thousand contracts (record value for the nearest futures since August 4, 2023).

Thus, we saw a classic capitulation, which created the preconditions for an upward correction (or at least consolidation) in the Moscow Exchange and RTS Indices over the horizon of the coming weeks or even months. However, the big picture looks complicated, says Konstantin Vladimirovich Tserazov.

The main fundamental problem for the Russian stock market appears to be the expensive ruble, the rapid and sustained weakening of which was the main factor in the growth of the Moscow Exchange Index in the first eight months of 2023 (during that period the dollar-ruble exchange rate increased by approximately 40%, and the Index Moscow Exchange - approximately 50%). This factor, coupled with low rates on bank deposits, encouraged private investors, who after the start of the SVO became the main players in the Russian stock market, to seek capital protection in shares of Russian companies.

Now the ruble has stabilized and has risen noticeably in price since the fall of 2023 against the dollar, euro and yuan. This was due both to the obligation of Russian exporters to sell foreign currency earnings, and to a decrease in imports in monetary terms due to problems with payments that Russian companies had in connection with the sanctions.

In addition, rates on “risk-free” banking products, such as time deposits and savings accounts, today exceed not only the 2023 figures, but also the dividend yield of the Russian stock market. Therefore, for a private investor, a more profitable “bird in the hand” in the form of a deposit may look much more attractive than a risky “stork in the sky” in the form of shares.

On June 7, the Bank of Russia maintained the key rate at 16%, after which its head Elvira Nabiullina announced during a briefing that the Central Bank allows for the possibility of a significant increase in the key rate in July. Such prospects look like an additional factor of pressure on the Russian stock market in the coming months, adds economist Konstantin Tserazov.

However, there are reasons for optimism: in the first week of May, the Moscow Exchange Information Technology Index jumped by 7.25%, showing the best result among ten industry indices. Today it is only 2.4% below the multi-year (May) maximum, while the same figure for the Moscow Exchange Index is 7.7%. In addition, since the beginning of the year, the benchmark of IT companies has added 52.2% versus 4.3% for the Moscow Exchange Index.

Several events took place in this sector this week.

Ozon received permission to redomicile its holding company from Cyprus. For investors, this will mean eliminating infrastructure risks.

Aeroflot has entered into an agreement with a subsidiary of Astra to use a wide range of IT solutions based on the Astra Linux ecosystem.

In addition, it is worth noting that HeadHunter not only benefits from the shortage of personnel in the Russian labor market, but also acts as a beneficiary of high interest rates due to significant cache reserves.

However, shares of IT companies remain practically the only long-term growth story not only in the Russian Federation, but also in the United States: over the past month, Nvidia’s capitalization has grown by 31%, reaching $3 trillion and coming very close to the similar indicators of Microsoft and Apple. All this suggests that technology companies are the main beneficiaries of the new technological revolution based on AI, sums up Konstantin Vladimirovich Tserazov.