Market with artificial prices: what experts say about the growth of Russian stocks and their future

Рынок с искусственными ценами: что говорят эксперты о росте российских акций и их будущем

According to some, investors early to fall into euphoria about the growth of the Russian market.

Bidding without shorts and non-residents

24 March Russian stock market partially opened after a month's "vacation". To avoid a second collapse — 24 In February, the Mosbirzhi index fell by 33%, — regulators have taken support measures.

For example, The Ministry of Finance allocated a trillion rubles from the NWF for the purchase of shares. And the Bank of Russia banned brokers from taking applications for the sale of shares from non-residents.. Also, the Central Bank banned short sales.

As shown by the results of the first auction, support measures worked. 24 In March, the Mosbirzhi index rose by 4,4%, like most Russian stocks.

According to Hasnian Malik, expert of the analytical company Tellimer, prices on the Russian market are artificial: "Now it is a non-functional market in terms of effective pricing.. Foreigners own a significant share of shares in free float, but they were forbidden to sell.".

According to the brokerage company "Aton", foreigners account for more than half of the shares in free float.

"It's too early to talk about the recovery of the market. I'd be skeptical., that we don't see a significant drop. And I expect, that it will happen if not today, then over time, because foreigners want to leave.", — says jacob Christensen, an analyst at The Danish commercial bank Danske Bank.

Anton Barinov has a similar opinion, founder of the analytical company iNDEX Group. Here's how he answered the question of RBC "What Russian actions to look at?»:

"I would sell everything in the place of a private investor.. It's a temporary rush., as during the fall of the ruble. Then people rushed to buy real estate., Appliances. Now they are frantically buying up shares.. Some people think, that this is an opportunity to earn, as in 2014 and 2008.

I believe, it is better for a simple man in the street to abandon Russian shares. There is uncertainty in the Russian economy. If all goes well with her, then you will still feel good: save your work, and your business will grow.

But if everything is bad, then you and the job may lose, and your stock portfolio may fall. From the point of view of risk management, it is now better to pay attention to foreign securities".

  HIG : Hartford Financial Services

The Russian market is no longer developing

One of many reasons, according to which foreign investors will begin to sell Russian shares, is an investment rating.

2 In March, MSCI changed the status of the Russian market from Emerging – "Developing" – to Standalone – "Separate". The provider said, which will exclude Russian stocks from all its indices. Including from the Emerging Markets Emerging Markets Index. The price and share of Russian shares in the indices will be taken to zero.

This decision MSCI made after that, how the Russian regulator "locked" non-residents. Now funds like BlackRock, that track msci indexes, will be forced to sell shares at any price. When the opportunity arises.

MSCI "Standalone" Markets

Country Region
Argentina America
Jamaica America
Panama America
Trinidad and Tobago America
Bosnia and Herzegovina Europe
Bulgaria Europe
Malta Europe
Russia Europe
Ukraine Europe
Botswana Africa
Zimbabwe Africa
Lebanon Near East
Palestine Near East

Region

Investing as a way to escape inflation

According to the Moscow Exchange, 24 March, the volume of trading in shares amounted to 109 billion rubles. That's a lot, given that, that only one was allowed to bid 33 stock, there were no non-residents, and the session time was only four hours.

For comparison: average daily trading volume in January 2022, when there were no restrictions, amounted to 201 billion rubles.

And the exchange reported, what 24 Half a million retail investors came to trade shares in March. Their share of the total trading volume was 58%. Aton expert Elbek Dalimov believes, that this is how investors are insured against inflation.

Maybe, it's not a bad option. Recently, the Russian stock market has been compared with the Iranian one, since the West had previously imposed similar sanctions against this country.. And here's what Vladimir Kiselev writes about this market, former analyst of the investment company "Income" and author of the telegram channel Bastion:

"With all the problems in the economy, the stock market in the country has become a popular way to save.. With inflation in 40% the key rate of the Central Bank of Iran is only 18%. An Iranian cannot keep money on deposit and not lose a significant part of its purchasing power.. Getting dollars is not easy. The stock market remains.

  RGEN promotion. Sadness..

In 2010, only 3.2 million investors were listed on the Tehran Stock Exchange. By 2020, the number of private investors in Iran has increased to about 50 million people., that is, up to 70% of the country's population.

Iran's Local Currency Stock Market Index has risen in 2018 13 once, which helped offset the collapse of the currency. In dollar terms, the market has doubled. Truth, there are signs, that there is unhealthy overheating in the market. According to Ceicdata, P / Iran's stock market E is 380".

Eternally Underrated

How many experts, so many opinions. No analyst knows for sure, how much will the shares of any country be worth in a year or even a month. That's why it's worth paying attention to non-opinions., and more fundamental factors. For example, Diversification.

In its world index, MSCI allocates about U.S. stocks 60%. But the share of Russian shares - until the exception - accounted for only 0,4%. Even China, the world's second-largest economy, is only about 4%, because there are different regulatory risks in the country.

The Russian market can be called a developing market, separate and whatever else. What's important is something else: it's not just the economy that determines the price of local stocks — it's not all right, either., — but also non-market factors. That is why the cost multipliers of the Russian market like P / E and P / B relatively low, and the market itself is always called undervalued.

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