MOSCOW — Russia’s stock market will climb to record highs this year and continue advancing in 2022 thanks to abundant global liquidity, but risks of a downside correction are in place, according to a Reuters poll of 13 market experts.
Russian stocks have been on the rise after collapsing in the first quarter of 2020 when the COVID-19 outbreak became global, gaining support from a recovery in oil prices, an easing risk of sanctions and an influx of retail investors.
“An inflow of cheap liquidity on markets, low bonds yields and inflationary concerns prompt investors around the globe to put money in the stock markets,” said Sovcombank chief analyst Mikhail Vasiliev.
The MOEX rouble-denominated index, which hit a record high of 3,949.07 on Aug. 18, was expected to reach 4,000 by the end of this year, up about 3% from Monday’s close of 3,883.01, according to the August Reuters poll.
“Earnings by banks should continue to rise due to the higher interest rate environment, while gas producers will continue to book excess profits due to the very tight supply situation on global markets, particularly in Europe,” said Erik DePoy, equity strategist at Gazprombank.
By the end of 2022, the MOEX was expected to reach 4,500, with forecasts ranging between 3,800 and 5,050.
While the consensus was optimistic, some experts voiced concerns about a possible pullback of monetary stimulus by the United States which had been buoying the economy amid the pandemic.
“Markets should get ready for QE (quantitative easing) tapering and rate hikes soon. Current asset valuations are fair only in the conditions of soft monetary policy,” said Pavel Verevkin, investment strategist at Alor Broker.
But after a possible downturn, the Russian market will see buying again thanks to abundant global liquidity and an ongoing rise in the number of retail investors, said Vasiliev from Sovcombank.
Russia’s high dividend yields have proved an attractive proposition for people amid COVID-19 lockdowns that have kept them at home, and the number of amateur market players has increased, exceeding 13 million people.
The dollar-based RTS index was forecast to trade at 1,700 points by the end of this year, up about 3% from Monday’s close of 1,649.94.
The RTS was seen climbing to 2,000 by end-2022, its highest since 2011, with forecasts ranging from 1,600 to 2,150.
(Other stories from the Reuters Q3 global stock markets poll package:)
(Reporting by Andrey Ostroukh; additional polling by Sujith Pai and Indradip Ghosh; Editing by Bernadette Baum)