the Russian securities market six years ago was in an unenviable position. The Ukrainian crisis and Western sanctions even more lowered stock prices, and investors are disappointed in the economic prospects of the country. The situation has further worsened due to the decline in oil prices.
But after that the market perked up considerably. Index Mosberg, which is the main indicator in ruble terms, since the beginning of 2014 rose by 150 percent, as the threat of new us sanctions eased and there are signs of economic recovery. The dollar-denominated RTS index last year rose by more than 40 percent, taking second place among 90 major markets, followed by watching Bloomberg.
Investors in Russian assets are attracted by low interest rates, higher dividends, which are paid by public companies, and improving corporate governance, said Boris Blokhin, the governing Department of the stock market on Masuria.
the Symbol of the revival became the state energy giant Gazprom to regain last year Lavra the largest listed company after the increase of dividend payments.
this helps and monetary policy. Taking control of inflation, the Russian Central Bank last year reduced the discount rate to 6.25%. Accordingly, banks cut the interest rates savers, forcing some of them in search of income to apply to the shares.
a Number of private investors on the Moscow stock exchange last year had doubled to 3.85 million, and the total amount of retail capital inflow increased by 47 billion rubles ($760 million).
the Context
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“Whenever reduced rates, we have new investments, — said Blokhin. — People don’t want to keep deposits in banks, for them a 5% profit is insufficient, and they begin to look for new instruments”.
Come to the market and foreigners. The sum of investments of foreign investors in Russian companies at the end of last year amounted to $ 80 billion, and that was the highest since the imposition of sanctions in 2014. For the 12 months until September 2019, the inflow of foreign capital reached $ 4.6 billion, as evidenced by the official data from Bloomberg.
“Many understand that this market is very different today from what it was in 2013-2014,” said Alexander Branis, working in the Fund Prosperity Capital Management chief investment Advisor.
the improvement of the conditions may lead this year to a series of primary and secondary public offerings of shares in Russian companies, said Luis Saenz (Luis Saenz), working in London and head of the Department shares in the company BCS Global Markets. This will occur after a two year hiatus, due to another round of us sanctions.
Optimistic analysts argue that the rise of the quotes may continue. “If you look at the ratio of price-earnings and yield, it becomes clear that Russian stocks are still undervalued,” said Branis. From the Induseksa Mosuri the ratio of market value of shares profit on it of about seven, i.e. about two times less than that of the main Chinese index, and three times less than that of the S&P 500 index. The norm of the dividend yield on that index is about six percent.
the rest of Russia is still catching up. Due to the sharp fall in oil prices in 2014 (and oil is the main article of Russian export) and the negative impact of sanctions on the country’s economy fell into recession, and in 2016 have returned to weak growth. Last year GDP growth was only about one percent, but analysts noted that the easing of the positions of Washington has created a brighter Outlook.
“12 months ago, investors kept the fear of sanctions from the United States, but now those fears have eased,” said Paul Greer (Paul Greer), operating a portfolio Manager at investment management Fidelity International.
Luis Costa (Luis Costa), working in Citigroup’s strategy in European emerging markets, says on a “special cocktail”, which attracts investors: this positive growth, the inflation rate below four percent, the positive balance of current account and currency reserves in the amount of 542 billion dollars.
Other analysts still remain cautious. “There are limits to the potential growth that could provide Russia, — said a senior economist at Legal & General Investment Management Magdalena Polan (Magdalena Polan). — Despite numerous conversations and plans that were made in the past, in efforts to rid the economy from dependence on commodity exports and invested too little money”.
“the Ship safe, but he doesn’t move forward, said in October, Deputy Finance Minister of Russia Alexei Moiseev. — And this is a problem.”
the Government uses a modest form of fiscal stimulus, trying to speed up the growth, but the Central Bank is concerned about the consequences of such incentives for inflation. The quality of corporate governance continues to be a concern for investors.
“We are looking for corporate management, which has great importance for the protection of minority shareholders, and that therefore in Russia it is very difficult,’ said Rob Marshall-Lee (Rob Marshall-Lee), the portfolio Manager on the emerging markets in the company Newton Investment Management. The rise of prices some time, is bound to continue, but growth is not very strong, and the quality of governance is weak, and therefore a recovery in the market will last not for long.”
the new York times contain estimates of the solely foreign media and do not reflect the views of the editorial Board of the new York times.
