Fund workers are retreating – Newspaper Kommersant No. 178 (7379) of 09/27/2022
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Trading on the stock market for the first time in five years closed with a drop in the Moscow Exchange index below 2,000 points. The withdrawal from risky assets is taking place against the backdrop of growing tensions around Ukraine and partial mobilization in Russia. As a result, shares of the technology and commodity sectors lost the most in price. Given the possible increase in external sanctions pressure and the tax burden on the private sector, market participants allow the index to decline to 1700-1800 points.
The bear game on the Russian stock market resumed on September 26 with renewed vigor. At the very beginning of the trading session, the Moscow Exchange index dived below 2000 points, and by the middle of the day updated the minimum since February 24, reaching 1841.93 points, having lost more than 10% since the close of the previous session. Despite the fact that the index returned above the level of 1900 points at the end of trading, the market closed at 1933.35 points, the lowest level since September 2017. Compared to Friday, the decline was 7.5%.
The fall of the market, in fact, continues from the middle of last week, from the date of the announcement of referendums in the LDNR, Zaporozhye and Kherson regions and partial mobilization (see. “Kommersant” dated September 22).
During this time, the Moscow Exchange index lost more than 20%. As Oleg Syrovatkin, an analyst at Otkritie Investments Global Research Department, notes, both key events of the past week look too big for “investors to price their consequences in just a few days.”
At the same time, the fall in quotations is on a wide front, adds Vasily Karpunin, head of the information and analytical content department of BCS World of Investments. As Dmitry Alexandrov, managing director of Ivolga Capital, notes, the IT sector is falling stronger than the market on expectations of further sanctions on the segment, as well as coal miners, who may suffer from tax increases. Thus, on September 26, securities of high-tech issuers (Yandex, VK, TCS, Ozon), which lost 10–14% of their capitalization, were among the leaders of decline. However, their quotes rolled back only to the values of June-August. Other blue chips that fell in price at the last auction (except for Gazprom and Sberbank) returned to the values of five or six years ago.
The outlook for the coming weeks will be entirely determined by geopolitics, market participants say, and sentiment will remain largely negative.
According to Georgy Vashchenko, deputy director of the analytical department of Freedom Finance Global, the demand for stock market instruments for medium- and long-term investments will be extremely low in the near future. Consumer demand will be suppressed, in October the decline could become significant, comparable to the period of the acute phase of the COVID-19 pandemic, he said. In addition, a serious factor of pressure on the market is the strengthening of the ruble, which hinders the shares of exporters.
The collapse may be replaced by a “sharp rebound”, Mr. Vashchenko believes, although “the medium-term trend will not form in the foreseeable future.” As the nearest strong driver for the rebound of the market is the meeting of shareholders of “Gazprom” on September 30, says Mr. Karpunin. “If dividends are approved on it, this could provoke an impulse of growth not only in the shares of the company, but in general in blue chips,” he added.
In general, the papers of telecoms and energy will be the most stable, they will be among the first to recover after the collapse, Georgy Vashchenko believes, since “their business does not carry significant risks, demand for electricity and communications is inelastic, and tariffs will be indexed to maintain profitability” . Also in the future, he expects a recovery in demand for paper exporters.
At the same time, the results of the referendums create prerequisites for the escalation of the conflict around Ukraine and the introduction of new sanctions against the Russian Federation. Dmitry Alexandrov believes that the most effective limitation is the setting of upper levels for oil prices, especially if China and India join them. In addition, according to Oleg Syrovatkin, the Russian government’s plans to cover the budget deficit by raising taxes and fees call into question the prospects for paying dividends by Russian companies. Under such conditions, market participants assume that the Moscow Exchange index may drop to 1700-1800 points.
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