The Moscow Exchange index updated its minimum for the month, reaching 3054.25 points

For the first time in a month, the Moscow Exchange index closed below 3,100 points. The bearish game was carried out for two weeks on a wide list of securities, but in recent days the main movement of the index was determined by the quotes of state banks. Investors are taking profits after eight months of continuous growth amid increasing geopolitical risks and tightening monetary policy of the Central Bank. In such conditions, investor interest in more conservative deposits and bonds, which again bring double-digit returns, is growing.

During the main trading session on September 19, the Moscow Exchange index updated its minimum since August 17, reaching 3054.25 points. In addition, for the first time in a month, the index closed below the level of 3,100 points – at 3,083.85 points, which is 1.6% lower than Monday’s closing values. Compared to the local maximum reached in early September, the index lost more than 6%.

The sale of shares went on a broad front for two weeks, including against the background of the closure of long positions after the strong growth that occurred in previous months, market participants note. Over eight months, the index grew by more than 50% and at the beginning of September it updated a one-and-a-half-year maximum, reaching 3287.34 points.

In recent days, the bearish game has resumed with renewed vigor – on Tuesday, securities of first-tier companies fell in price by 1.6-3%. Among the outsiders were Sberbank (-2.1%) and VTB (-2.9%). Oil and gas sector securities fell by 1–2%.

At the same time, the total volume of trading in shares during the main session amounted to 120.5 billion rubles, exceeding the previous day’s figure by 30%.

The reason for the sale was increased geopolitical risks, including against the background exacerbation situation in Nagorno-Karabakh. There were other reasons, in particular the tightening of the Central Bank’s monetary policy. Last Friday, the regulator raised the rate by 1 percentage point, to 13%, without ruling out continued growth and maintaining high levels in the long term.

The rate increase has made conservative instruments, such as bank deposits, bonds and money market instruments, even more attractive, notes Konstantin Asaturov, managing director of the equity department at Sistema Capital. Thus, a number of large banks have already announced plans to raise rates on deposits and savings accounts (see “Kommersant” dated September 16).

Yields on short-term OFZ issues rose above 12% per annum for the first time in more than a year. “The dividend yield of Russian issuers that have already announced payments for the first half of 2023 does not exceed 6.5%, and the prospect of the introduction of the 12th package of EU sanctions is an additional negative factor for sentiment, despite rising oil prices,” the analyst notes IC “Veles Capital” Elena Kozhukhova.

Market participants are talking about the possibility of further decline. According to Digital Broker analyst Daniil Bolotskikh, if the index consolidates below 3100 points, the next support level will be 2985 points.

“The level of OFZ yield will influence the attractiveness of the stock market in the near future. The restoration of oil exports in September, coupled with rising oil prices, will keep the dollar exchange rate in the range of 92–94 rubles/$, thereby reducing interest in shares of exporters,” the expert notes.

But absent major geopolitical or energy market shocks, the correction will not last. “In the medium term, rising oil prices should significantly support not only the Russian market, but also the ruble, and the latter may allow the Bank of Russia to once again switch to a soft monetary policy and begin to reduce the key rate,” notes Konstantin Asaturov. Then, in his opinion, “the resumption of market growth should not be long in coming.”

Vitaly Gaidaev