“Gazprom” parted ways with the market

With the beginning of a new month and a new quarter, the Russian stock market returned more than 4% on the Moscow Exchange index after a series of failures at the end of September. With a rare, albeit significant, exception in the form of Gazprom, many liquid securities confidently rose in price. Its participants do not expect continued recovery of the market, noting the continuing influence of negative geopolitical factors.

After hard sales at the end of last week on Monday, October 3, investors won back part of the losses, and the Moscow Exchange index returned above the level of 2 thousand points. As a result of the trading session, the index closed at 2041.96 points, which is 4.3% higher than the previous day’s close. At the same time, the activity of investors decreased – the volume of transactions did not exceed 50 billion rubles, while last Friday it exceeded 100 billion rubles.

The Russian stock market grew on Monday on a wide front, including against the background of the closing of short positions after a wide sale of the last month, market participants note.

According to Irina Prokhorova, an analyst at Otkritie Management Company, a return to positive dynamics can be regarded as a normal phenomenon following a strong correction observed over the previous two weeks.

In her opinion, despite the fact that geopolitical risks have not weakened, the possibility of reducing production by OPEC+ countries by more than 1 million barrels per day is a positive for the Russian market. According to Alexander Dorozhkin, head of the share management department at Ingosstrakh Investments Management Company, there are currently no significant prerequisites for the Russian market to be below the levels set after February 24, taking into account the upcoming dividend payments. As the expert explains, “the market prepared for the worst-case scenario, but received half-hearted sanctions.” In particular, most market participants were confident in the sanctions on the NCC and additional SDN sanctions on the remaining banks, but the restrictive measures affected the expanded list of officials and several companies (see below). “Kommersant” dated September 30).

It is indicative that among the most liquid securities, only the shares of Gazprom (slightly more than 1%) and Phosagro (1.1%) lost their value. According to Yuri Grossman, portfolio manager at Trinfico Management Company, the main reason for Gazprom’s lagging behind is pipeline damage. Nord Stream. If it cannot be returned to operation, “the company will lose a very significant part of its income,” says Mr. Grossman. If the inputs do not change, investors can expect negative free cash flow next year and a fairly modest dividend yield of about 5%, estimates Irina Prokhorova.

Partially returned their positions and securities of high-tech companies – Yandex, VK, Ozon. In addition, the growth leaders were the securities of gold mining companies – Polyus (more than 9%), Polymetal (almost 15%), which until recently were outsiders. At the same time, gold mining companies may experience increased interest due to the deterioration of the overall macroeconomic environment (experiments by a number of large central banks, fears for the financial stability of the Swiss Credit Suisse, etc.), Irina Prokhorova points out.

Experts approach the assessment of the nearest prospects of the market cautiously. According to Yuri Grossman, as far as the short and medium term is concerned, growth will be influenced “not by the presence of any news, but rather by the absence of shock informational reasons for ‘risk aversion'”.

In his opinion, this concerns both the escalation in Ukraine and new anti-Russian sanctions, as well as radical legislative initiatives within Russia that can affect the business of broad index companies or the real incomes of the population. Irina Prokhorova also notes that the development of the geopolitical situation will remain “a determining factor for market dynamics in the foreseeable future.” At the same time, the OPEC+ meeting will be of increased interest this week. In case of reinvestment, record dividends from Gazprom and other companies, as well as an inflow of funds from expiring bank deposits, can support the market in October and November.

Vitaly Gaidaev, Dmitry Ladygin