RT: Russia’s MICEX this year’s best performing stock index

Published time: February 26, 2015 10:19
Edited time: February 26, 2015 16:31

Reuters/Maxim Shemetov

Reuters/Maxim Shemetov

The Russian ruble-denominated MICEX is currently the best performing index this year, with analysts expecting the growth streak to continue, despite rating downgrades, Western sanctions and the plunge in the oil price.

The MICEX has added 27 percent since the start of the year, outperforming some of the leading indices in Germany, France and Italy, MICEX confirmed in an e-mail to RT.

Source: Moscow Stock Exchange

Source: Moscow Stock Exchange

Russian analysts expect the growth to continue during the year. Aleksey Astapov of asset managers Arsagera expects the MICEX to hit 2,100 by the end of 2015, a huge jump from Thursday’s reading of 1,750. It’s close to the 2011 high, and a further rise could drive the index to its highest level since 2008.

The MICEX hasn’t given a forecast but said 2014 market volatility was largely spurred by oil prices and geopolitics, and that forced many foreign investors who had quit Russian stocks to change their attitude to the market in the second half of 2014 and the start of 2015.

“Our data shows that in the beginning of 2015 the overall net purchases of Russian shares by foreign investors were above $656 million (40 billion rubles),” MICEX said.

An expectation of corporate revenues in Russia is a key factor for index growth, according to Astapov. A combination of a weaker ruble, import substitution and the state support for some industries makes investors believe Russian firms would produce robust results, he said.

‘Black Tuesday’ that shook the Russian market and the currency in mid-December was just one single ‘episode’, according to Ivan Tchakarov, a chief economist at Citibank Russia, while investors need to take a broader, more impassionate view.

Read more: Ruble plummets losing more than 20% in a day, hitting new dollar and euro lows

“Russian market suffered a lot last year, which led investors to lose interest, but now there are hopes that geopolitics are looking a bit better, so there are some investors trying to come back selectively and from very low levels,” Tchakarov told RT.

Western pressure and prospects

The downgrade on the Russian economy to non-investment grade by the two global rating agencies S&P and Moody’s were largely anticipated, and the effect on the Russian market will be limited, analysts agree.

“There were expectations building up that Russia will be downgraded to junk. That’s how we can justify the effect that the Russian market has strengthened at the beginning of the year exactly the time when we have downgrades to junk,” Tchakarov said.

READ MORE: Russia’s downgrade by Moody’s ‘exorbitantly negative, politically motivated’ – finance minister

“Our personal view is that S&P and Moody’s have an unnecessarily bearish view on the Russian economy that led them to thinking about downgrades. We don’t disagree that it will be a difficult year for the Russian economy – quite the opposite – we also expect a recession, but we do not think it will be as deep and as painful as it is anticipated by Moody’s. This is the reason why we still think that Russia deserves to be at Investment grade status,” Tchakarov said.

Sober-minded investors are skeptical about the data that the rating agencies release, and consider them to be‘politicized’, Astapov wrote Russia Today in an e-mail.

The Western sanctions against Russia that have already hit both sides are in fact good for Russia, Astapov said.

“… we think, it [the sanctions – Ed.] is a good challenge for the Russian economy and a good reason to start the escalated economic reforms oriented at domestic resources,” he said.

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One Response to RT: Russia’s MICEX this year’s best performing stock index

  1. Hegelian says:

    The brain pool that leads the world didn’t consider that maybe these fast rising economies in the world might consider stop dealing with a pack of thieves and create their own money system. There are several ways of turning money into currency. The one they are in right now is so antiquated, archaic, and convoluted that nobody knows what’s going on, who’s in control and where all the money they created went. The world has changed since Nicaragua, Peru, Congo, Indonesia and Iran in the 1960’s. Todays villains can not be created and kept control of after watching Khadafy and Saddam, particularly, when they partner up and go rogue on the handlers. There are so many different handlers, with the wealth and different agendas, planned events has morphed out of control. This is not George Orwell’s Oceania, as much as the old war mongers would like it to be. They can not just take the crimes that have been perpetrated and flush them into non-existence. It will begin to straighten out when the perpetrators start to pay. The use of depleted uranium, mini-nukes, and drone bombing innocent civilians is not the way to win hearts and minds. Surely, there are enough people in the administration that are honest and patriotic enough to clean out the attic. However, George Orwell said; “war is peace” if we are going by the 1984 novel playbook. Brzezinski said: “We use to have to kill a few to control a million but now we have to kill a million to control a few” so maybe we are.

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