For the first time in two months, the Moscow Exchange index closed above the level of 3200 points

For the first time in two months, the Moscow Exchange index closed above the level of 3,200 points. The confident growth of Russian stock prices has continued for the last three days, and experts attribute it to the reinvestment of interim dividends and expectations of positive reporting by issuers for 2023. At the same time, the Russian stock market remains one of the options for protection against inflation and depreciation of the ruble in the long term. And this year it may be supported by increasing dividend payments, as well as a reduction in the key rate in the second half of the year.

At the end of trading on January 31, the Moscow Exchange index closed above 3,200 points for the first time in two months. During the trading session, it reached 3219.41 points, the highest since November 27, 2023. And it closed at 3214.19 points, exceeding the previous figure by 0.6%. The index has been growing steadily over the past three days, during which time it added more than 1.6%.

At the same time, trading volumes in recent days reached 60–70 billion rubles, that is, above the average level since the beginning of this year. According to Anna Buylakova, an analyst at the investment company Digital Broker, if the index consolidates above the level of 3200 points, then in the future investors will test resistance near last year’s maximum (around 3290 points). The stock market continues to experience spot growth, influenced by the factors of dividend reinvestment and expectations of generally good corporate reporting for 2023, says Sergei Suverov, investment strategist of the Arikapital management company. In particular, according to him, among the growth leaders were Gazprom shares, as investors hope “for a return to dividend payments based on last year’s results.”

The key factor in the increased demand for Russian shares remains the sharply reduced number of options for protecting ruble funds from inflation and depreciation of the national currency in the long term after February 2022, says Dmitry Babin, stock market expert at BCS World of Investments. According to the expert, for some Russian owners of large capital, the Russian stock market remains in this regard almost the only option for such investment purposes. According to the Moscow Exchange, the share of private investors in stock trading is about 80%. At the same time, according to the Bank of Russia, wealthy clients, who make up less than 2% of the total number of broker clients, own 73% of the assets in brokerage accounts. “As a result, the Russian market is resilient even to a serious deterioration in the external environment, as well as to periodic increases in geopolitical and sanctions threats,” notes Mr. Babin.

A more local driver of growth in the Moscow Exchange index is the approaching dividend season, including the return to payments of a number of large companies, primarily the ferrous metallurgy industry. In 2024, SberCIB analysts expect dividend payments of RUB 4.9 trillion. According to Mr. Suverov, investors reinvest 30–40% of dividends received into shares.

According to the analyst’s forecasts, if the external market situation does not change significantly, as well as the geopolitical situation and the regime of anti-Russian sanctions, then, most likely, by the end of the year the Moscow Exchange index will update the local two-year maximum set in September (3287 points). Mr. Suverov expects that the index may rise in price by the end of the year and reach 3,700 points against the background of a continued influx of retail investors into the market and a likely reduction in the key rate of the Central Bank in the second half of 2024.

Ksenia Kulikova