The stock market in 2018 could reverse the decline, despite sanctions

© RIA Novosti / Ramil to Setdiscoverable in fotobanka. Archival photoThe stock market in 2018 could reverse the decline, despite sanctions© RIA Novosti / Ramil to Setdiscoverable the image Bank

The Russian stock market declined in 2017, but he has a chance to make up the loss in 2018, despite the possible extension of sanctions from the United States, according to respondents RIA Novosti analysts.

The ruble index Mosuri for 2017 decreased by 5.51%, to 2109,74 points, the dollar index of RTS has grown on 0,18%, to 1154,43 points, follows from the data of the Moscow exchange.

The ruble against the dollar calculations «tomorrow» in the same period increased by 6.4% to 57.57 ruble to the Euro decreased by 6.7% to 69,135 ruble.

Did not wait for the lifting of sanctions

Investors had hoped that with the arrival of Donald trump for President of the US sanctions against Russia will be lifted. However, this did not happen. Moreover, in the beginning of 2018 will be considered the subject of the expansion of sanctions, they may affect holders of the Russian national debt, which could adversely affect the stock market, experts say.

Negative dynamics of the Russian market in 2017 was primarily caused by disappointment of investors regarding the possibility of lifting or easing of sanctions after the arrival of the trump for President of the United States, according to Edward Harin from UK «alpha-Capital».

Despite the fact that the companies included in the index Mosberg significantly increased profit this year (especially Sberbank), on the dynamics of the Russian market is not particularly affected, says Yaroslav Kalugin from «Veles Broker». In his opinion, at the end of 2016 the share price quite expensive on the background of expectations for the easing of sanctions after the victory of the trump in US elections.

Analyst CC «Finam» Sergey Drozdov also believes that optimism is the end of 2016 — beginning of 2017 on the Russian stock market was associated with hopes for the lifting of sanctions by the US. At this stage it was replaced by a fear of introducing new measures in respect of Russian debt from the overseas Ministry of Finance, which may prohibit foreign investors to buy domestic bonds Federal loan, also points out the analyst.

Other factors pressure

Harin from UK «alpha-the Capital» notices that the contribution to the reduction of indices made a high key rate of the Bank of Russia, and the high yield bond market has attracted a large number of «hot» foreign money, which substantially strengthened the ruble, and until mid-year interest in the Russian stock market was minimal.

While Georgy Vashchenko of IR «freedom Finance» believes that the backwardness of the Russian indexes is that international investors are not attracted significant funds focused on Russia.

«Investments have been mostly short-term, speculative,» he adds.

The analyst of «KIT Finance Broker» Dmitry Bazhenov agree that the strong ruble contributed to the growth of the stock market: a significant proportion of Russian companies are exporters, and their performance directly presses the strengthening of the Russian currency.

Vasiliy Karpunin from «BCS Express» calls as one of the most common causes of weakness in slow growth of the economy: in this respect, Russia loses almost all its competitors and, thus, global investors primarily prefer other countries.

According to Mikhail Krylov from «Golden Hills — Kapital AM», there are very high chances that world markets will be all quiet, so this drawdown, as of now, it is easy to play for one month. However, the risks of volatility in global markets next year Russia will not be isolated, and then the dollar-denominated RTS index and the index of Mosuri will fall faster than global market, he said.

Russia among other emerging markets

If you compare our market with other developing platforms, the RTS index in explicit outsiders, and all the backlog has been accumulated in the first half of 2017, says Vasiliy Karpunin from «BCS Express». To the current time index of developing countries MSCI EM shows an increase of 32% since the beginning of the year, he says.

As noted by the Deputy Director of analytical Department of «Alpari» Natalia Milchakova, compared with the indices not only developed but also developing countries, including countries of the former Soviet Union, the Russian indexes look this year is very pale.

«So, the stock market of Kazakhstan by the end of 2017 can be called an extremely profitable among developing countries: the index of the Kazakhstan stock exchange KASE increased by 57%. The Vietnam stock index HNX rose by 53.5%, the Indian stock index Nifty 50 rose by 31.4%, while the Chinese index (HKEx) Hang Seng rose by 37.1%,» — quoted examples of it.

At the same time, investors usually are looking with interest at the lagging markets, suggesting the possibility of subsequent catch-up growth, draws the attention of Dmitry Golubkov, chief investment strategist at Citibank. Ratio price/earnings for MSCI Russia index at the moment is about 8, while the same coefficient for the share of emerging markets is more than 15, and according to world index MSCI ACWI over 21, he estimated.

Sectoral indices

The best dynamics for the year showed the index «metals and extraction» Moscow stock exchange rose by 5.17%, and the index «chemical production» that grew by 1.21%.

The index «banks and Finance» have fallen by 16.28% (despite growth of papers of the savings Bank), the index «oil and gas» — 9,45%, the index «electricity» — 8.46%, and the index «consumer goods and trade» — by 7.13%. The index of «transport» decreased by 1.48%, the index of «telecommunications» — on 1,56%.

One of the structural problems of the market in that it contains 85% of a small number of large companies, and a strong movement in one or more largely determines the dynamics of the market as a whole, indicates Georgy Vashchenko of «freedom Finance». For example, the index of heerassagala two-thirds consists of «FosAgro», and one-sixth of the «BRIC» (which soon delisting) and «Akron».

The metallurgy sector has grown primarily on the positive dynamics of RUSAL, whose shares rose more than 46% amid rising prices for aluminum, gives the example Milchakova from Alpari.

The stock market in 2018 could reverse the decline, despite sanctions© RIA Novosti / Maxim to Aminopherase in photobacteria mirror response to possible new sanctions of the USA, said Zakharov,»This sector of the Russian economy least affiliated with the state, which, accordingly, reduces the risks from the introduction of new sanctions against Russian metallurgical companies. In addition, the acceleration of industrial production growth of China in the first half of the year provided additional support for industrial metals, which, in 2017, growing at an average 20% -30%,» adds Evgeny Abramovich from Dukascopy Bank SA.

At the same time, Sergey Drozdov from «Finam» notices that this sector is cyclical and at the moment this trend is nearing completion.

Milchakova reminds that at the end of the year from the index of the telecommunications sector was also excluded, the share of AFK «Sistema», therefore, the sector of telecommunications showed a good result, she points out.

The collapse of the index banks and Finance associated with the fall of VTB Bank shares by 33% and stocks by 14%, according to Milchakova from Alpari. In addition, the impact of the decline of the index banks and Finance assisted the reorganization of the Bank «Otkrytie» and PSB, as well as corporate news around AFK «Sistema», until recently, was the component of the index, said Bazhenov from «KIT Finance Broker».

The stock market in 2018 could reverse the decline, despite sanctions© RIA Novosti / Vladimir Sergeevicha in photobanks unlikely to lift sanctions against Russia in 2018, he said,»In the banking sector it was difficult to expect any overall growth, as the elements of a crisis situation affecting the entire sector, and securities of Sberbank, on the contrary, are the recipient of benefits as problems with the reliability of banks is the extra flow of customers in Sberbank», — says Andrey Kochetkov from «Opening Broker».

According to Kochetkova, the oil and gas sector has failed to significantly improve their results to the market continued to expect more. «Especially disappointed with the results of Rosneft, and the constant burden of the investment «Gazprom». Not the last role was played by public policy, when first stated about the need to pay state-owned companies 50% of the profits as dividends, and then widely used an individual approach,» he explains.

What to expect in 2018?

The stock market in 2018 could reverse the decline, despite sanctions© RIA Novosti / Evgeny to Betemporary in photosangelina or weak: what will happen to the ruble in early 2018 codemichael wings of the «Golden Hills — Kapital AM» believes that domestic exchange can still catch the index of developing countries MSCI EM in 2018.

The probability of introduction of new economic sanctions from the United States is extremely high, which has a negative impact primarily on oil and gas companies, said Yevgeny Abramovich, head of analysis foreign exchange risks the Dukascopy Bank SA.

Also in 2018 can be achieved the main goal of OPEC on reduction of stocks of raw materials in the world, which will create the preconditions for a smooth release of oil-producing countries of mining limitation agreements, expects it.

«Against this background, the demand for shares of Russian companies that are not heavily dependent on economic cycles, may increase. These include the securities of «Yandex» and «Magnet» — the expert believes.

The stock market in 2018 could reverse the decline, despite sanctions© RIA Novosti / Michael Clientgenerated in фотобанкFacebook explained the blocking of the account, Kadyrov sankcijama Kochetkov of «OTKRITIE Broker» hopes that in 2018 the electricity sector to remind yourself of the improvement of financial performance and capitalization growth. In addition, it keeps a pretty positive Outlook on oil prices, which also should lead to improved financial performance oil and gas sector.

However, the worst sector in 2018, in his view, can once again be the consumer. «It should be noted that retailers have exhausted the resources of closing small commercial business, now a paper from the «stories of growth» has become unreasonably expensive action upon their financial performance and volume of investment return. We do not expect any rapid growth in consumer activity in Russia, and, consequently, the trading company will experience difficulties,» he said.

The stock market in 2018 could reverse the decline, despite sanctions© RIA Novosti / Vitaly to Belowaverage in fotoracconti not have any impact on «Gazprom Neft», said the head of Kompaniya opinion Harina from the criminal code «Alfa Capital», the next year may be the year of resource, primarily oil and gas companies, whose prices are still not incorporated in the price of oil above $ 60 per barrel, as the current ruble and the price of «black gold» of their shares may cost significantly more.

Citi analysts recommend investors to monitor the behavior of Russian actions «the second echelon». In 2016-2017, this share showed a growth of about 150%, reminds chief investment strategist of the Bank. When this action «the second echelon», according to the observations of analysts Citi, reach a peak, usually 1-2 months before the peak reaches the market as a whole. Thus, action «the second echelon» are a kind of indicator of the behavior of the Mature market, they said.