Analysts predict stability – Kommersant FM

Economists expect modest growth in the Russian stock market. In 2023, the Moscow Exchange index grew almost 1.5 times, completely recouping the fall due to the outbreak of hostilities in Ukraine. However, in the new year, growth will be much more restrained, Kommersant FM’s interlocutors say. The market is under pressure from the high key rate of 16%, which has increased the attractiveness of deposits and provoked an outflow from the stock market. VTB analysts believe that in 2024 the Moscow Exchange index will grow by 5% at best. “Kommersant FM” surveyed brokers about how they see the prospects for Russian stocks, and what ideas they call the most profitable.

The Moscow Exchange index ended the year at around 3.1 thousand points. Deputy Director of the analytical department of Freedom Finance Global Georgy Vashchenko does not expect significant breakthroughs from the indicator: “In the base scenario, subject to the relative stability of the ruble and a tight monetary policy, the Moscow Exchange index will not exceed 3.6 thousand points. Demand for shares will no longer be rushed, but the influx of money will still be significant. Most of them may go to the bond market, bypassing the stocks included in the index.

The market can grow significantly only within the so-called inflationary scenario. If the weakening of the ruble and high inflation in the domestic market will spur demand for protective assets. True, the implementation of such a scenario is unlikely. As long as the Bank of Russia maintains a tight monetary policy, a significant part of new investor funds will go into bonds and shares not included in the Moscow Exchange index.”

The Ministry of Finance said that the key rate may begin to decline only at the end of 2024. The Central Bank also announced that rates will remain high “for a long time.” Tinkoff Investments’ strategy for this year also highlights another factor that will determine the development of the stock market. These are the presidential elections that will take place in March. Analysts directly write that the authorities will deal with the risks of inflation using separate decrees. In particular, the results can be achieved at the expense of the income of large companies.

In addition, if previously Russian shares were attractive due to low prices, now, according to Tinkoff Bank, they are fairly priced. The main and, perhaps, the only driver of growth will be company dividends, says Digital Broker analyst Daniil Bolotskikh:

“For an investor, dividend yield usually looks more attractive. And here we have a standard story. We expect dividends from LUKOIL in the amount of 1 thousand rubles over the next 12 months. on paper, which reaches almost 15% per annum, and they are likely to grow. Due to currency revaluation, Surgutneftegaz will pay large dividends, we predict 13.5 rubles. Thus, the dividend yield in 2024 could exceed 23%.

If you believe the words of the head of Sberbank, then a decrease in profits is not expected in 2024-2025. This gives confidence that in the next two years Sberbank’s dividends will not be lower than 32 rubles. per share. I would also like to mention the Moscow Exchange, whose commission and interest income is growing.

However, dividend payments should be viewed not from the point of view of expectations, but from the point of view of cash flows.

Presumably, in 2024, Russian companies will pay dividends in the amount of 4.9 trillion rubles. If we calculate free-float, it turns out that 1.6 trillion rubles. can reach the market.

This is quite significant, considering that in 2023 the total amount of payments was about 2.8 trillion rubles. versus the currently expected 5 trillion rubles.”

The authorities are trying to stimulate interest in the stock market. From the beginning of the year, investors can open a new type of individual investment account. It will allow you to receive a deduction for the deposited amount in the amount of 13%, and not pay tax on income. However, benefits can only be obtained after five years of using the account.

Also called a positive, but secondary factor, is the boom in initial placements. In the first half of the year alone, Moscow Exchange expects 7-8 IPOs, which will provide investors with additional choice. However, listings took place last year, but the volume of funds raised was insignificant, and the new companies did not arouse much interest among investors. The exception was Sovcombank, whose order book was oversubscribed by more than 10 times before the placement.

Stock market expert at BCS World of Investments Evgeny Mironyuk, at the request of Kommersant FM, identified the key favorites for the coming year: “We highlight metallurgy and mining as the favorite sector in the global market. Most metals and raw materials fell, but at the same time, domestic prices in Russia even increased. World prices for coking coal remain at a favorable level – above $300 per ton. Supply from Australia and China is not enough to satisfy demand in China and India. As for steel, the outlook for the sector remains positive; production restrictions and incentives in China will support world prices.

We give preference to Severstal and Mechel with a bet on resuming dividends in the first case and reducing debt in the second.

At current prices and the ruble exchange rate, Severstal securities can provide a 14% yield. And taking into account previously accumulated money on the balance sheet, the profitability can exceed 30%.

In the oil sector, growth potential is approximately 23%. Its price in 2024 will remain at $80 per barrel of Brent. Oil profitability remains noticeably higher than historical levels. Catalysts for the growth of this sector will be the potential conclusion of agreements on the Power of Siberia-2, the phased launch of Arctic LNG-2 and the buyback of LUKOIL shares. In addition, two stocks with a positive outlook are Tatneft shares, because it seems that the company is returning to paying out at least 75% of net income in the form of dividends, and Transneft preferred shares, which are expected to split in the first quarter of 2024 size 100:1″.

A VTB survey showed that 65% of Russians expect the stock market to grow in 2024. The most attractive sectors for investment were oil and gas, technology and energy. Brokers, however, stipulate that the stock market is still under pressure.

Alfa Capital, for example, assigned its strategy the fourth risk group out of five possible, which means a high probability of drawdowns in the medium term. Against this background, investment houses suggest paying attention to substitute bonds and gold, which can be invested in through shares of gold mining companies.

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Ivan Yakunin